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Executives

Wanyee Ho - Investor Relations Director

Jeffrey Kang - President, Chairman and Chief Executive Officer

Frank Zheng - Chief Financial Officer

Analysts

Charles John - Piper Jaffery

Brian White - Jeffries

Ramesh Misra - Collins Stewart

Amir Rozwadowski - Lehman Brothers

Adele Mao - Susquehanna International Group

James Faucette - Pacific Crest Securities

Comtech Group, Inc. (COGO) Annual Audited Results and 2008 Guidance Conference Call March 13, 2008 4:30 PM ET

Operator

Good afternoon ladies and gentlemen and thank you for standing by. Welcome to the Comtech Group Incorporated Annual Audited Results and 2008 Guidance Conference. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator Instructions). This conference is being recorded on March 13, 2008.

I would now like to turn the conference over to Wanyee Ho, Investor Relations Director. Please go ahead, ma’am.

Wanyee Ho - Investor Relations Director

Thank you, Nicole, and good morning to everyone. I am Wanyee Ho, Comtech’s Investor Relations Director and I would like to thank you all for joining us today to participate in Comtech Group's 2007 end year Earnings conference call.

After the bell today, Comtech issued a press release reporting preliminary audit financial results for the period ended September 31st, 2007. This release can be accessed in the investor relations section of Comtech's website at www.comtech.com.cn and on most other financial websites.

The discussion today will be hosted by Mr. Jeffrey Kang, President, Chairman and CEO, who will address the company operations. Thereby he is followed by Mr. Frank Zheng. who will report the company’s financial.

Before we begin, I would like to remind everyone that the call today will contain forward-looking statements regarding future events and the financial performance of the company. We wish to caution you that such statements are just predictions, and actual results may differ materially as a result of the risks and uncertainties inherent in the company's business. We refer you to the documents that the company has filed periodically with the SEC, specifically the company's Form S-1, and the most recently filed Forms 10-Q and 10-K, as well as the Safe Harbor statement made in todays press release. These documents contain important risk factors that could cause actual results to differ materially from those contained in the company's current projections. Comtech assumes no obligation to revise the forward-looking information contained in today's call.

At this time, I would like to turn the call over to Jeffrey Kang, President, Chairman and CEO of Comtech. Jeffrey, the floor is yours.

Jeffrey Kang - President, Chairman and Chief Executive Officer

Thank you, Waynee, and thanks to everyone for joining this earnings call. I am delighted to report that we achieved the best of quarter in company’s history, delivering the highest quarterly revenue and profit ever. We have done this while continuing to improve the gross and operating margins of our business and drive profit growth faster than its outlined.

During the fourth quarter after 2007, our revenue grew by 46% year-over-year to reach $70.9 million US, and non-GAAP EPS dilutive of $0.22, representing a growth of 38% from last year. This enabled us to deliver revenue of the $228.5 million US and non-GAAP EPS dilutive of $0.73 for the full year 2007, representing more than 35% year-over-year increase. Revenue exceeded the guidance as of the preliminary announcement.

The revenue break down in fourth quarter is as follows: mobile handset comprised 40% of the total sales; it is the never then increase of the 22% quarter-over-quarter growth and 50% year-over-year growth. Digital media made up of 25% of the total sales, it grew 32% quarter-over-quarter and 64% year-over-year. Telecom infrastructure represented a 30% of the total sales, increases was 31% of quarter-over-quarter and 24% year-over-year. Service business represented 4% of total sales, increases 7% quarter-over-quarter and 24% year-over-year.

Now let me provide some highlights from this quarter and a business outlook for the rest of the 2008. We continue to experience robust revenue growth with above expectation performance across all of our key business areas here in the quarter. We are very confident that we will achieve 25 to 30% growth target in this year, which we provided in this February. The (Chinese state) in the year, based on existing visibility and as the new business in the pipeline, management is providing 2008 full year guidance of $285 million in revenue and non-GAAP EPS of $0.90. We will be able to achieve this aggressive goal, despite a downturn in the US economy, because our business mainly targets the Chinese domestic and newly emerging markets which we expect to continue on a robust upward trajectory that offset any negative news from the US.

We believe the handset market’s outlook for 2008 will remain strong with around 25% growth in the Chinese domestic market and a 50% in export. As we begin the first quarter of the 2008, contrary to the investment community is concerned our inventory problems, we have observed that inventory is quite a healthy across the industry and its demand better than expected. We believe industry performance and our own business will exceed expectations in this first quarter.

Next turn to our digital media business. The fastest growing end market for COGO, it has contributed around 25% of our total business in 2007. Driven by the robust, the business expansion of Set-Top-Box GPS and other new solutions, we feel confident regarding that we projected growth in the digital media business and forecast an increase of the 40% in this sector for 2008.

Next, let's review COGO's traditional market. The telecom equipment business complies the 31% of the total business. Here we estimate our major customers Huawei and ZTE were demonstrating more than 40% annual growth in 2008. We project a stable 15% of growth for this segment in 2008, as we planned to focus especially on growing this business with a meaningful margin in this sector. We have excluded most of the 3G business in China from our existing forecast. Although, we believe Chinese 3G will certainly come this year and when it does, it will add a significant boost to the company's growth this year.

While COGO strive to deliver strong performance in the existing key markets in 2008. We also expected to generate revenue from the new industries such as the auto electronics and the Green Energy. We estimated this new business will contribute over a 5% of the total revenue in 2008 and became another long-term growth driver for COGO.

Next, the service segment, and it made up around a 4% of our revenue and experienced an increase of 26% a year-over-year for the three year in 2007. We continue to be confident that this will be a high growth high margin proportion for Comtech and will deliver over a 30% growth in this sector in 2008.

Finally, I would like to elaborate on our M&A development. Over the next few months, Keen Awards, a company we acquired last year was awarded a service major design wins to provide display panel solution to a few major OEMs in China. Already the fastest growing business unit in a company, KA will continue to experience explosive growth this year, fueled by this design win and achieve over 10% revenue of our total business in 2008.

We have a few acquisition deals in our pipeline and we’re currently in the final stage of due diligence and a business integration process and expected to close at least one deals in the second quarter of this year. Our principal with M&A is that, we place integration ahead of closing a deal, and consequently we usually spend a significant amount of time ensuring a smooth transition prior to concluding an agreement.

Although the deal process may take longer than some investor expected. This quantity and a synergy treatment acquisition have provided a solid foundation strong organic expansion in the long term growth. We expect accretive acquisition to accelerated growth in next few years.

On this Monday we announced our stock buyback to affirm our believe in the company’s continued growth. Because of Comtech strong financial position we believe we will still have abundant of cash after the buyback program. To turn the call over to Mr. Frank Zheng, our Chief Financial Officer to report audited results. Frank.

Frank Zheng – Chief Financial Officer

Thank you Jeffrey. Good afternoon everyone for clarity or the figure I am discussing unless otherwise noted reviewing US dollar. As Jeffrey mentioned earlier we achieved another record quarter in our company’s history. Now let me review the line items ofr the fourth quarter. Revenue was 70.9 million US, a increase of 26% quarter-over-quarter and 46% year-over-year, gross margin were 19.5% compared with 18.8% reported during the same period last year, due to more favorable product mix, many of the gross higher margin product offering such as digital media and the service market during the quarter.

Operation expenses were 11.7% of the total revenue for the fourth quarter. Research & Development expense was 2.2% of the total revenue. Selling, general and administration expense were 9.5% of the total revenue.

Operation margins for the fourth quarter was 7.8% versus9.2% for the same quarter in 2006. However, excluding the affects of stock based compensation and acquisitions related costs, including amortization of the purchased intangible assets non-GAAP operation margin would have been 11.6%.

Net income for the first quarter was $6.1 million US, representing GAAP EPS diluted of 15% compared to $0.13 in the same quarter of 2006. Non-GAAP EPS diluted were $0.22. The weighted average number of shares used in the calculation of EPS dilute was 40.3 million annually.

For the full year 2007, the company reported audited revenue of $228.5 million an increase of 34.7% compared to the 159.6 million reported during the 2006. And the total revenue normalized by adding the full quarters together was $222.1 million higher than the guidance we provided, as well as our preliminary announcement.

The cost of Chinese yuan appreciated significantly against the US dollar over the last year. Our full year audited revenue was $6.4 million higher than the sum of the four quarter reported revenues. Being conservative we encouraged the investor to add up the full quarters results to measure the company operation performance and the growth. We expect Chinese yuan to continue to appreciate against the US dollar in 2008 and to improve our business performance this year.

Gross margin was 19.4% of the sales, compared to 18.6% for the same period last year. The operation margin was at 8.8% as compared to 9.7 last year. Excluding the stock based compensation and acquisition related cost, including amortization of the purchase intangible asset, non-GAAP operation margin would have been 11.9%. The company has an effect tax rate of 8.4% and a net income was $0.55 per diluted share.

Excluding the effects of stock based compensation expense and acquisition related cost, including the amortization of the purchase intangible assets and the recognized deferred taxation, the company would have reported non-GAAP EPS of $0.73 for the full year.

The balance sheet. We have maintained a healthy balance sheet. Comtech completed the quarter with $126 million in cash and a bank borrowing of only 1.2 million. It continues to be in strong financial position with current ratio of 4.3 to 1. Shareholder equity at the end of 2007 was $199.5 million. Inventory turnover day have shortened to 29 days. Day (hour) receivable was 75 days. Operating cash flow was at a positive 7.3 million.

We are confident we will continue to deliver strong performance with a strong organical growth and a kind of acquisition. This concludes our remarks and thank you everyone for joining the call to discus our 2007 audit results. I would like to turn the call over to the operator to open the floor for questions.

Question-and-Answer Session

Operator

Thank you sir. . (Operator Instructions) Our first question is from the line of Charles John with Piper Jaffery. Please go ahead.

Charles John

Hello Jeffrey, this Charles from Piper Jaffery.

Jeffrey Kang

Hi Charles.

Charles John

Hi. Congratulations on the quarter. Just two quick questions. In terms of your alternative energy the revenue line and your business. Can you give us some more color on how you expect to get to the 5 to 10% of overall revenue? If you could give us some more color on customers and how it ramped in 2008.

Jeffrey Kang

As we expect discuss lets say in our last call, we expect totally 5% of total revenue from this new business in this 2008. In auto electronic business, we would already get some kind of certain revenue from our existing organic business. So the customer base of those auto electronic vendors in China and so, we already have over 20 customer base in this area. In terms of the Green Energy business with another industrial application for us in this segment. So right now we have a couple of operating deals in this segment. So I think that the new acquisition will help us moving to this new high growth business. So we expect – in the first half of this year we’re not going to see a small portion of the business from this new business. But we are going to see some revenue ramp up in that since the second of this year in this new business.

Charles John

Okay, great thanks. In terms of restructuring, hearing a lot of rumors about the Chinese legislature and the fact that they might come out of an announcement. The question we have is, will there be a pause in the CapEx if this restructuring is announced before or after the Olympics and how that might impact global?

Jeffrey Kang

As we explain in this call, in our press release, we are very confident and very optimistic about capital expenditure for the new 3G business building up in China. So after this the carrier restructuring we are going to – we are expecting the 3G license granting in the next couple of months before or after Olympics, and we are expecting to see the capital expenditure of the 3G, a building is going to come. Even though in our current guidance we have not included our 3G in the revenue, in our guidance yet, but I certainly believe it will come. So once it comes, it will become another strong athletes to COGO, because we are well position in this business. We have solution that goes to the 3G infrastructure equipment business, at same time we have strong business in the 3G, a mobile handset business. So we pretty much covered all the major players in the infrastructure side as well as cellphone side. So once it comes and certainly COGO will be another athletes to boost our business in this year.

Charles John

And one last housekeeping question. If you could give us the breakout of stock based compensation for the cost of good sales that’s given in R&D, I didn’t find that in the press release?

Jeffrey Kang

I think it’s usually on our, just like a compensation breakdown is roughly in R&D, its like a 30 to 40% and the sales marketing and SG&A is like 60% of the total cost from that segment.

Charles John

Okay, perfect. Alright thank you and good luck.

Jeffrey Kang

Thank you.

Operator

Thank you. Our next question is from the line of Brian White with Jefferies. Please go ahead.

Brian White

Yes, Jeffrey, it sounds like the headset inventory issue is behind the industry, and you said the March quarter it should be a little better than expected for handset. So what type of seasonal fine should we expect in the handset business for the March quarter?

Jeffrey Kang

Yes. Even though investment in communities deal, wiring up out the inventory building in China or the slowing demand in China. But – what we are observing is inventory is not an issue at all. So we believe currently that inventory issue in the value chain is only around like a one or two weeks at this moment. And we are saying the demand is quite a strong after the Chinese new year and we are seeing the whole market is re-bounce back. So from that angle, so we are going to see, that’s overall market, but a mobile handset market in China is like this year as I just said discussing n our press release we think of us is like a whole market in China can have a 25% in the market growth. So in this first quarter, even though the first of quarter is seasonally down comparing with Q4, but our view is only like a 15% versus the last the quarter. So which is quite a normal, it’s quite a normal amount as the normal seasonality. So that’s why we believe that over in the monthly performance we’ll in a better than what people anticipated.

Brian White

And Jeffery on the 3G you participated last year, I guess, the 10 cities are really built out last year. So what does it really mean if licenses are given out? Are you under the assumption that more cities will be covered this year maybe before the Olympics or after or the penetration in the existing cities will be deeper? Just give us some details on what it really means if the licenses are given out for you guys?

Jeffrey Kang

You know, if there is a macro in the market stuff. So if the government grants the 3G license, the carriers, the restructured carriers. So what we are going to see is that, in the existing 10 cities. So there certainly we’re going to see more capital expenditure, more (Inaudible) investment. And in this existing 10 cities and which will probably before the Olympics. And further what we're going to say is the government or the carriers certainly will expand their (CDS AVMA) coverage across all the other major cities in China.

So given that and the huge potential in this TV business in the second half, but we believe that will happen after the Olympic, probably in the fourth quarter of this year. But it was certainly give a big capital expenditure in this segment that it will help all the 3G players equipment and vendors, cell phone vendors, chip set vendors and a module designer like ours, where all of us will benefit from this strong capital expenditure in this year.

Brian White

And today Jeffery we really have China Mobile as the only one that has started to build up a network and that could expand?

Jeffrey Kang

In our understanding once the restructuring has been done, probably all carriers will be granted the 3G license. So, for the TV? Currently China Mobile are already on it. But we still believe as other carriers like -- they probably will also expanded into this TV 3G businesses in China.

Brian White

Okay. And just finally what was the operating cash flow in the quarter? And also if we had depreciation CapEx?

Jeffrey Kang

Our operating cash flow in the quarter is $7.3 million US positive.

Brian White

Okay. Do we have depreciation in CapEx for the quarter and then what you think for '08?

Jeffrey Kang

I think in terms of the acquisition, you mean, amortization or you mean capital expenditure or what?

Brian White

Yeah, just CapEx expenditure and depreciation?

Jeffrey Kang

I think this capital expenditure; you mean projection in 2008 or '07?

Brian White

For the quarter, and then for 2008?

Jeffrey Kang

We actually, we haven't give this 2008 projection yet. The capital expenditure is very small in the fourth quarter. I actually don't have this number around. I can send you after the call.

Brian White

Okay that’s fine, Thank you.

Thank you. Our next question is from the line of James Faucette from Pacific Crest Securities. Please go ahead.

James Faucette

Thank you very much. I had just a few questions related to the assumptions behind your guidance. Firstly, is it correct that your guidance that you have basically reiterated today does not include the impact from any share buyback and planned acquisition?

Jeffrey Kang

Yes. So in terms of the guidance in both revenue and especially for the EPS. So we haven’t included stock buy back program, so we does use the normal outstanding or diluted share accounts this year. So, as we discussed in our press release, if we start to execute our buy back program, we certainly – we are going to stay that EPS set at 18 because of the stock buy back program.

In terms of acquisition, in this guidance, we have only included the acquisition which already is in our pipeline probably one or two deals. But we certainly believe in this year even or the situation we’ll have a lot of cash in our balance sheet and we will have a couple of deals already in our pipeline. We certainly believe we have more acquisition coming this year. So this guidance haven’t fully reflected our acquisition we’re going to do this year.

James Faucette

But it does include at least a couple of acquisitions that you plan to closed over the next one or two quarters is that right?

Jeffrey Kang

Yes correct.

James Faucette

Okay, great. And then finally, just as far as your longer term business development and alike, where do you see the most opportunity, I mean, it sounds like you’re targeting obviously automotive and Green tech, should we anticipate that that would be the focus for you and your acquisitions for the foreseeable future and how should we think about the relative margin in those segment or in those businesses? Thank you.

Jeffrey Kang

I terms of the territory or industry we are looking at for our acquisition target. So we think about you know, are we targeting both the digital media segment as well as the new industries such as the auto and green energy institutions. So in terms of the gross margin, there are structure for this new industries, so we expect the margin structure is same or slightly higher than our existing digital media business which is like 20 to 30% gross margin in our business. So internally when we look at this acquisition target we usually will always target in those business which have the gross margin over 20 to 30% of the gross margin business.

James Faucette

Great. And I am sorry back to the acquisition, how much would you expect of your revenue guidance this year? How much are you expecting your acquisitions to contribute that you have included and how much of the EPS are you expecting now to contribute this year?

Frank Zheng

Frankly, you know, our acquisition is not just a purity acquiring the new numbers in, because we put this and how we are able to get the incremental value, incremental revenue as a key and to view our acquisition target. So for example, when I get Keen Awards, the business this year and like a 10% of the total revenue. But most – the revenue is not generating from the older customers. All the major revenue generated this year is from our existing customer base. So from that angle, we are not just simply adding as our Keen Award set all the revenue, than our class with total organic growth. So after completing the acquisition, we will spend a lot of efforts in bringing the new solution and new products in front of all our existing customer base which usually started to generate a decent incremental revenue, the two quarters after completion of deal. So that’s why from our perspective in the first two quarter of closing the deal the impact is little bit just kind of the neutral or slightly accretive, but usually after two quarters we are going to see a exclusive growth from that business. So that’s why from the 2008, in terms of our guidance, I believe most of the business coming from our organic business, we believe the impact to our overall business, our overall revenue guidance or EPS guidance is coming through the Q3 or Q4, mostly in Q4. So from that angle – so we don’t think they have too much impact to our guidance number this year specifically the flat. But we cannot quantify how much penny is coming from the acquisition under this moment.

James Faucette

Great. Thank you very much.

Operator

Thank you. Our next question is from the line of Ramesh Misra from Collins Stewart. Please go ahead.

Ramesh Misra

Good morning Jeffrey and Frank. My first question is in regards to Q1. Obviously SG&A was pretty high in Q4. Should we be looking at a similar rate in Q1 or does that come down sharply in Q1?

Jeffrey Kang

You know, One of them raising in the fourth quarter because we usually have a lot of the expenses that are going be booked in the fourth quarter, because it's a year-end. So we are not going to illustrate, in general our operating expenses will be gross lower than the revenue growth, that's how and where our operating average coming from. So we encourage investor to use the annual basis to measure the business rather than quarter-by-quarter. So this is especially -- fourth quarter is the year-end, we usually kind of taking more reserves out of the fourth quarter to be a conservative company. So that’s why we don't expect SG&A continue to jump not a much in the quarter-over-quarter.

Ramesh Misra

Okay. In terms of overall revenues and business trends in Q1, you know the street has been down about 15% or so in Q1. Is that something you are comfortable with, I mean, you anticipate a fairly sharp decline in the handset business and more modest decline in the other segments. Can you give us a sense of the different drivers in Q1?

Jeffrey Kang

First of all, we did not say the sharp decline in terms of the mobile business. As I just explained, we think the mobile business is normal, it tentatively better than how people anticipated. So sensing in other segments, telecom infrastructure, as well as the digital media business. So that’s why – we’re not incurring to see any significant or sharp decline for any of our business. So that's why I think, even though for the company, we don't give this quarterly guidance. We only give the annual guidance, but I think currently, I think this overall, the current state, the consciences is the right indication for the business breakdown by quarter this year.

Ramesh Misra

Okay. In regards to your Clean-Tech effort, can you help us understand what exactly is it, are you going to focus on LED lighting or are you going to make solar cells. What exactly is the plan here?

Jeffrey Kang

In the KADO.

Ramesh Misra

In the Clean-Tech and the Green energy focus that you have/

Jeffrey Kang

We actually explained enough the call, we want to focusing on the energy saving so more like the electricity how help would design a module and module solution to power and power supply industry to supply the industrial obligation to help out the customer to save their electricity or other energy consumption. So in terms of the business model is more in a seminar to what we are doing now. So we are going to partner with the leading chipset vendors to design module to serve the equipment and the system OEM customer base in China.

Ramesh Misra

Got it. And then my final question on the 3G side Jeffrey. I think you have mentioned this before, but most of your revenues that you anticipate in 3G will be coming from the handset side, not from the telecom infrastructure. Is that still true or is there a change over there?

Jeffrey Kang

I think both of the revenue. I think we are going to say the capital expenditure from both sides, from both the infrastructure side as well as the mobile handset side. So we believe this year the capital expenditure is not adjusted for the mobile handset. For 10 Cds this deal needed to the deeper infrastructure investment to help the better coverage, and at the same time we are going to see the 3G going to roll out to more series in China this year.

Ramesh Misra

Now of course you have no inclusion of this in your overall '08 guidance. But if there is an upside from 3G, what should we be thinking of? Is it 10 million? Is it 20 million? Is it 50 million?

Jeffery Kang

I think at this moment I don't want to give any too much kind of high expectation at this moment. So we just think about if there is capital expenditure and a 3G license coming, according if it’s in line with people anticipated. So it's probably going to adding like another 5% growth to us this year.

Ramesh Misra

Okay. All right, thanks very much guys.

Jeffery Kang

Thanks.

Operator

Thank you. Our next question is from the line of Amir Rozwadowski from Lehman Brothers. Please go ahead.

Amir Rozwadowski

Good afternoon Jerry, Frank and Wanyee.

Jeffery Kang

Hi.

Amir Rozwadowski

From my side I know that you're not giving sort of quarterly guidance Jeffrey. But giving the upcoming Olympics, is there any shift in seasonality in your revenue expectations or should we look at it as similar to seasonal patterns from previous years?

Jeffery Kang

I think in general we didn't see too much of the seasonality shifting in this year. But we think about at this moment the Q1, for the COGO specific, we think the Q1 is little bit stronger than its normal seasonality.

Amir Rozwadowski

Okay great. And then, in terms of your guidance for 2008, I know we’ve seen significant appreciation of the Chinese yuan. Are you including any additional appreciation in your guidance?

Jeffery Kang

I don't think so. Basically even many people anticipate that Chinese currency will have another 7% to 10% appreciation in this year. But it is very harder fast to predict that of kind of trend. So that’s why, if you look at our '07 number and our audited number is like revenue, is over like say $6, $7 million higher than our reported or guidance number, and EPS are also higher, that’s why we encourage the investor using the normal number to measure our business rather than using the GAAP number, purely year-end GAAP number because that already included those currency appreciation. So our current guidance is we're based on exchange rate at this moment. So that’s why in the end of this year we're probably going to face another hasty problem like this in 2008.

Amir Rozwadowski

Okay great. Thank you very much for taking my question.

Operator

Thank you. Our next question is from the line of Adele Mao from Susquehanna International Group.

Adele Mao

Hi. I have two questions. First of all, Jeffrey, seeing that synergy from the acquired company (Inaudible) for another quarter. But, could you just give us an idea in terms of what their existing revenue is? Like just in terms of the size how big they are?

Jeffery Kang

We are for our acquisition target, as I just said we are not purely saying how much existing revenue they are generating. But we are more focusing on to our own calculations. So after this company acquired by COGO and they have the existing products technology and solutions. And then, we are able to put that solution in front of our broad customer base there. So that’s what – and then we are able to easily calculate how much incremental revenue we can generate in the next 12 months after complete this position. So based on this calculation and this projection we decided how and when to do this closing deal.

So that’s why its too early to tell the investor community what exactly revenue level looks like for the company we acquired. But certainly, now every deal we have done will be accretive deal to us, I know you did well and have various slope on basing for us to drive our long term growth.

Adele Mao

But are they currently generating meaningful revenue, like – are you buying their substantial customer relationship or existing contract?

Frank Zheng

We actually -- we’re pretty much focusing on existing technology and products better than their revenues and their existing customer relationship.

Adele Mao

Okay. And in terms of the KA, it looks like its going to be 10% of the total revenue. So its’ going to be 20, $30 million revenue having said that. Could you just take customer base a little bit and who were the original customer, who are the customers, who they actually brought in because of the synergies and generate longer deal?

Jeffrey Kang

For example, before COGO find them. So they have some two or three customer in the cellphone sector mostly are those second tier or third tier OEM guys, and we are seeing that mostly US investor are not all familiar with, in that kind most of them are basically in (Inaudible) it produce the cellphone maker one many or two many units per year. But after COGO, a quarter by COGO we putted them in front of many of our Tier-1 customer so like ZTE, like Huawei, like TCL, Alcatel, like TianYu or like Changhong were also in the digital media segment, we putted them in front of the managed EPS vendors and customers. So that’s why after a couple of months the design wins are timed. So we win a few major design win from our customer such as telecom and the TCL. So and they were seeing a various strong revenue ramp since this quarter and that’s why, that showed investor how, what’s the quantity of the deal for us, and how we’re going to generate incremental revenue by each acquisition we have done.

Adele Mao

Okay, that’s very helpful. Thank you.

Operator

Thank you. (Operator Instruction). Zheng, it looks like we have no further question. Please continue. We do have a question from the line of Jack (Terres) with JSH Partner. Please go ahead.

Unidentified Analyst

Jeffrey, good quarter. What I would like to know is when you use $0.90 this year, I want to be perfectly clear about, that does not include the yuan, is that correct? I mean, the yuan appreciation, is that correct?

Jeffrey Kang

Yes, correct.

Unidentified Analyst

Okay. So therefore in order to point out what the growth rate is ex the acquisition that you say are small in the numbers, what would the $0.73 have been if one appreciation was taken out?

Jeffrey Kang

$0.71 yeah.

Unidentified Analyst

$0.71. So then you are consistent with your 25 to 30% growth rate with your organic growth, is that correct?

Jeffrey Kang

Yeah correct.

Unidentified Analyst

Thank you very much.

Operator

Thank you. And at this time, there are no further questions.

Frank Zheng

So, thanks very much for coming for this call. Our focus over the past five years have been on creating a pattern of the sustainable and assigned growth for the company. We believe providing long term robust growth has been much more valuable than have volatile high performance year. And we are optimistic about maintaining our consistent growth pattern. I would like to this opportunity to thank all COGO’s believer, employees, customer and long term shareholder. We have provided COGO with opportunities to deliver robust and sustainable growth in the past and growing forward as we enter 2008. We believe we are in the right industries and right market to be able to capture and capitalize to commend this opportunities in China. Management is committed to driving a sustainable high growth in next five years and providing significant resistance to our shareholders. Thanks again for joining this call. I look forward to talking with you soon. Thank you.

Operator

Ladies and gentlemen, this concludes today’s Comtech Incorporated annual audited results and 2008 guidance conference call. Thank you for your participation and you may now disconnect.

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Source: Comtech Group, Inc. Annual Audited Results and 2008 Guidance Conference Call Transcript

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