Operator: … ladies and gentlemen. Thank you for standing by. Welcome to the Comtech Group Preliminary 2007 Fourth Quarter Results Conference Call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. If you have a question, please press the star followed by the one on your touchtone phone. If you would like to withdraw your question, press the star followed by the two. We do ask that if you’re on a speakerphone, that you please lift the handset before making your selection. This conference call is being recorded today, Friday, February 1, 2008. I would now like to turn the conference over to Frank Zheng, CFO of Comtech Group. Please go ahead, sir.

Frank Zheng: Thank you Rita, and good morning to everyone. I'm Frank Zheng, CFO of Comtech Group, and I would like to thank you all for joining us today to participate in Comtech Group's Fourth Quarter 2007 Preliminary Earnings conference call.

After the bell yesterday, Comtech issued a press release reporting preliminary financial results for the period ending December 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 Jeffrey Kang, Chairman, President and CEO. I also want to introduce Ms. Hope Ni, former CFO of the company, who is joining us today in her new capacity as vice-chairman of the board.

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 [yesterday’s] press release. Those 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 responsibility and 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, the President, Chairman and CEO of Comtech. Jeffrey, the floor is yours.

Jeffrey Kang: Thank you, Frank, and thanks to everyone for joining this earnings call. Today, we would like to talk about our fourth quarter preliminary results and provide investors with our business outlook for 2008.

I am delighted to report that we achieved the best quarter in the 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 top line.

During the fourth quarter of 2007, our revenue grew by approximately 45% year over year to reach more than $70.5 million US, and pro forma EPS was $0.22, representing a growth of approximately 38% from last year. This enabled us to deliver revenue of at least $221.5 million and Pro Forma EPS of $0.71 for full year 2007, representing a more than 30% year over year increase. Both revenue and EPS exceeded the previous guidance we provided. And by the way, we raised the guidance four times in 2007.

Now, before reviewing highlights from the previous quarter, let’s shift our focus to the business outlook in 2008. We expect to continue last year’s strong performance with robust growth of 25 to 30% in both revenue and Pro Forma EPS. 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 and offset any negative news from the US.

Let’s turn to the Chinese handset market. For COGO, mobile handsets comprised 40% of ‘07 revenue, and business grew over 19% over Q4 2006 and totaling 28% over the whole year of ‘06. During the fourth quarter, China domestic vendors shipped over 30 million units handset domestically. This comprised roughly 28% of the ‘07’s entire shipment, but fell below expectations of 30 to 35%. Usually the strongest quarter, fourth quarter domestic growth came in below forecast and was down from third quarter. However, this was offset by better-than-expected performance from the larger players, such as Huawei and ZTE, which export to new emerging markets. These companies delivered strong results with over 20 million units in the fourth quarter, making up roughly 37% of the ‘07’s export shipment. COGO was able to leverage both its domestic and export businesses, which brought our results for the fourth quarter in line with expectation.

Fourth quarter overall end markets reflected strong growth as expected, and Chinese local brands continued to improve their market share. As such, we believe concerns about a slowing down of the Chinese handset sector have been overstated. In fact, 2007 proved to be a landmark year for the Chinese handset industry. Chinese local brands delivered over 110 million units into domestic market and 60 million units to worldwide emerging markets, bringing a substantial unit growth of 50 to 100% in 2007 as compared to 2006.

We believe that the handset market’s outlook for 2008 will remain strong with around a 25% growth in the Chinese domestic market and a 50% in exports. As we begin the first quarter of 2008, handset shipments will be down versus the previous quarter, due to seasonality rather than soft demand or inventory problem, but year over year growth is expected to be decent. In fact, we are observing now is that inventory is quite healthy across the industry. Normally, we would expect the domestic market to be down by 10 to 15% and exports down by around 15 to 20% quarter over quarter.

There is another trend I would like to emphasize: In China, domestic players own over 50% market share. Despite predictions that global brands, such as Nokia, will increase their share and consolidate the handset market, this was not the case in China. Our observation is that 2007 saw market share shifting only among domestic companies, with traditional top tier players like Bird and Lenovo losing significant share to new entrants such as TianYu and Changhong. We believe in 2008 domestic companies will experience a slight increase in share, while both global and local players will show meaningful unit growth.

In summary, we are very optimistic regarding the robust growth in the handset market. We estimate that in 2008, demand in the Chinese domestic market will grow over 20% to reach 250 million units. In addition, units exported by domestic players are likely to grow by 50% and exceed 100 million units. These estimates already take into consideration the impact of a slowdown in the US economy. In 2008, we are projecting growth in COGO’s handset business of 20 to 30%, driven by increases in customer demand and ASP increase. Moreover, we estimate that our margin will remain stable or improve slightly in this extremely competitive industry because of our focus in the mid-end and high-end solutions.

Now let’s turn to the digital media business, the fastest growing end market for COGO. It’s roughly 25% of our total business, and for fourth quarter, we expect to continue to deliver better than expected results.

With the opening of the Beijing Olympics just a few months away, we expect continuous acceleration in the growth of the digital media market, driven by strong economic performance and consumer optimism and spending in China. In addition to our mid- and low-end solutions, we introduced our High Definition Standard Set-Top-Box solutions with Broadcom Chipset technology and started shipment at the end of the year.

Building on the strong growth in the set-top box and home gateway businesses, we continued to capture new opportunities and expand into new digital media applications development. Last year we entered into the fast growing education technology market with a customized module solution for English learning devices and GPS solutions. We expect to see the new revenue ramp up in 2008.

Overall, we feel very confident about the projected growth in the digital media business through 2008 and forecast an increase of 40% in this sector.

Next, let’s review COGO’s traditional markets: We are very pleased with the fourth quarter’s better-than-expected results. The telecom equipment business comprised approximately 30% of our total business. Revenue from this business jumped significantly in the fourth quarter, as we benefited from the growth of some of our major telecom customers, such as Huawei and ZTE, both of which are gaining global market share. We estimate that both companies will demonstrate more than 40% annual growth in 2008, at the expenses of global brands. We project a stable 15% growth from this segment in 2008. We have excluded most of the 3G business in China from our current forecasts, although we believe it will certainly come and when it does, it will add a significant boost to our business.

While COGO strives to deliver strong performance in the existing key markets, in 2008, we expect to generate revenue from the new industries like the auto-electronics and green energy solutions. We estimate that these new businesses will contribute over 5% of total revenue in 2008 and become another growth driver to COGO in the long run.

Next, the service segment, which made up around 4% of our revenue with an increase 26% year over year for full year 2007. We continue to be confident that this will be a high growth, high margin proposition for COGO and we will deliver over 30% growth in 2008.

Finally, I’d like to elaborate our M&A development. We concluded two deals last year. One of them is the acquisition of Keen Awards, a company that specializes in the design and engineering of display panel technology in China. We are especially pleased with the synergies between the two companies during and after the merger. We have already started to introduce new product and service offerings to our existing customers and received positive feedback. The acquisition expanded KA’s base from a few key cell phone customers to a much broader potential audience. We’ve already seen incremental better-than-expected revenue in the fourth quarter, and we estimate it will become 10% of the company’s revenue contributor in 2008.

Keen Awards is the first accretive acquisition since the offering, and we expect more like it in the future. Our principle with M&As 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 investors expect, these quality and synergy driven acquisitions have provided a solid foundation for COGO’s strong organic expansion and long-term growth. We expect accretive acquisitions to accelerate growth in the next few years. We already have a few deals in our pipeline, and we will report back to investors when the due diligence has been completed.

With that, I would like to turn the call over to Frank Zheng, our new Chief Financial Officer, to discuss the results. Frank.

Frank Zheng: Thank you, Jeff. Today I will provide preliminary information regarding Comtech’s Q4 performance. Our full year, audited results – including Q4 – will be available as part of our normal reporting cycle in March. At that time, we will discuss both Q4 and full year 2007 in detail.

I am very pleased to report that Comtech has experienced another record quarter, continuing our track record of reporting record revenue every quarter in 2007. Our preliminary Q4 2007 revenue is approximately $70.5 million US, which implies a more than 45% year-over-year top line growth versus the same period in 2006 and an increase of an estimated 22% compared with third quarter 2007. Total revenue growth for 2007 is estimated to be up over 30% as compared to 2006. We have experienced strong growth in all three business segments, including mobile, telecom, and digital media, with the latter experiencing the biggest increase versus 2006. We now believe we were able to outperform our earlier forecast, but I will leave the detailed breakdown of these results until after the audit is completed.

Our gross and operating margins during the quarter continued to improve and operating cash flow remained positive.

The Company expects to report Non GAAP EPS, of approximately $0.22 for the fourth quarter of 2007, compared to $0.16 for the same period of time in 2006, representing an increase of approximately 38%. EPS on a U.S. GAAP basis was approximately $0.16 for the fourth quarter of 2007.

Non-GAAP EPS for 2007 was approximately $0.71, representing an increase of approximately 34% over the previous year. Non-GAAP EPS, excluding stock-based compensation expenses and acquisition related costs consisting of the amortization of purchased intangible assets.

At end of December, we were in a very strong financial position with cash and cash equivalent of approximately 123 million US and bank debt only approximately 1 million US. Days of Inventory was around 29 days and Days Sales Outstanding was approximately 74 days, which is shorter than the normal period of 90 to 100 days. And Days Payable Outstanding is expected to be 37 days.

As we have not completed our audit, I will not provide the exact earnings number here.

Before opening up the floor for questions, I would like to call on our former CFO and new vice chairman, Hope Ni to say a few words. Hope.

Hope Ni: Thank you, Frank and Jeffrey. I just want to say a few words here. I have been with Comtech for 3 ½ years, since the company became public, and I think during that 3 ½ years, Comtech has become a better and a stronger company from both a financial and operational perspective. Our business has further diversified by having new design solutions and expanding into new business segments. For example, we started digital media two years ago. Now, the digital media segment is 25% of our business last year.

Year-over-year we have delivered very strong growth. In addition to business growth, we also have strengthened our corporate governance and internal control. We were among the first few China companies completed SOX 404 [compliance] in 2006 And last year we also have built a dedicated M&A team, which will help us to do more accretive acquisitions going forward. Although the present market in the U.S. is volatile and tough, I have full confidence that the current management can continue to deliver very strong growth in 2008.

I also want to point out that Comtech has over the 10 year company history. We have gone through a lot of tough market conditions before. So this, today’s market, you know, is nothing new to us. For example, we have gone through Internet bubble burst, we have gone through several inventory crisis, and the global telecom market slowing down. However, Comtech has always achieved strong growth despite those events. Working at the company for the past 3 ½ years has been a great experience for me. I also know Frank for a long time, and know I am leaving the CFO position in very good hands. I’m happy to continue to serve the Company at the board level. Today I just want to take the opportunity to thank all the shareholders who have been supportive of COGO and our work.

So, Jeffrey, do you want to conclude?

Jeffrey Kang: Yeah, thank you and, thank you Hope and, so I thank you everyone for joining the call to discuss our preliminary fourth quarter results. I would like to return the call to the Operator to open up the floor for questions. So, we will, we are looking to end this call around 9 o’clock. Operator?

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. As a reminder, if you have a question, please press the star followed by the one on your touchtone phone. If you would like to withdraw your question, please pres the star followed by the two. We do ask if you are on a speakerphone, you please lift the handset before making your selection. And our first question comes from the line of Charles John with Piper Jaffray. Please go ahead.

Charles John: Good evening Jeffrey and Hope. I’m sitting in for Mike Walkley.

Hope Ni: Hello, Charles.

Charles John: Congratulations on the good numbers in a tough market. I had a few questions. I’ll start with the local Chinese market. You indicated that your handset inventory is quite healthy and you’re expecting normal seasonality. Could you just provide some additional color on the impact of Chinese New Year and also overall inventory trends for the March and June quarters?

Jeffrey Kang: Okay, let me address, let me answer this question. So we — based on our existing survey from most of our customers so we believe currently the inventory they’re creating is at a very healthy level. We believe that currently the market only has around 15 to 20 days of inventory. So I think this inventory level is you know a very, very healthy level and from our existing order flow, customers demanding information, we believe … the first quarter overall should be a good quarter and I think even though … overall shipments could be down versus the fourth quarter, it’s because of the seasonality. But overall I think the first quarter results should be slightly better than what we expected.

Charles John: Okay, great. And when we look at your overall guidance, it’s pretty strong for 2008. Could you just walk us through some of the specific variables and in your long term gross margin growth forcast? So, just trying to understand, you know, if it’s the mixed shift across your divisions or if it’s competitive dynamics as the module space gets more aggressive, or is there some other factor that we’re really not thinking about?

Jeffrey Kang: You know, I think overall again, I think that currently is the economy is slowing down mostly in the US, in the United States. As you know, for COGO, roughly 70% of our business comes from the Chinese domestic market and another 30% [comes] from the new emerging market, which we have virtually no US economy exposure. And you know if you look at all, every segment, now the Chinese GDP even the people are talking about China slowing down, it’s more like, and you can look at all these projections, it’s kind of a slowing down 1% in terms of GDP growth on like 11.5% to 10% of GDP growth in ’08. So, running a business on a 10% growing GDP country, so we don’t see any you know fundamental changing in terms of the strong growth driver. Look at any single industry, cell phone infrastructure, digital media or new business, so we still see plenty of growth opportunities. So that’s why we still believe COGO, a 25 to 30% of growth is certainly achievable for us in 2008.

Charles John: Okay.

Hope Ni: Let me just add that I think you know by the margins – you were asking about the margins, right? We expect the gross margin to continue to improve and I think we actually have successfully improved the gross margin year-over-year, so I think the trend will continue and then one of the reasons that we actually always felt this higher margin business, because our industry, it is a very competitive industry, as Jeffrey pointed out you know in the call earlier, cell phone industry is a competitive industry, but why we were able to improve the margin, one is because we’re getting to new industry, and usually the new industry, newer solution reward us [with] higher margins. And another thing is you know we continue to invest in R&D as well.

Charles John: Okay, and one last question for me: you talked about two new markets, you know the auto electronics and your green energy solutions; how much visibility do you actually have into these divisions? Is it something you would have to work through with your customers like Huawei or ZTE, or do you already have something in the pipeline that gives you confidence for the 5% guidance, 5% of revenue guidance?

Jeffrey Kang: You know, we already have entered into this business last year and we already have the contracts from our customers, so that’s why we’re thinking that we are in a good position to report our revenue from this new segment in this year. So I think the visibility from this new business is very strong and we are very confident we will deliver over 5% of business in this year from this new segment.

Charles John: Okay. Thanks, guys, and good luck.

Jeffrey Kang: Thank you.

Operator: Thank you. Our next question comes from Brian White with Jeffries and Company. Please go ahead.

Brian White: Yes, Jeffrey, so often the stock price, and you have $123 million in cash, have you thought about a stock buy-back?

Jeffrey Kang: You know, we certainly are considering any good way to you know maximize or protect our investor value. But you know as an entrepreneur we’re certainly, you know, stock buy-back is certainly something we are considering. But we also are thinking about how to allocate our capital wisely to keep the strong growth of the company, so we need to balance the company’s long term capital demand and the short term interest of how to protect our investor value.

Brian White: And what percent…?

Hope Ni: I just want to add a point that because we, you know, we are actively seeking acquisition targets and apparently the cash, even though right now is sitting there, but there is a purpose for the cash, so we will have to consider our cash management and how much proceeds we need [to use] in the coming few months.

Brian White: Okay. And just going back to the handset market, you know there are some chip suppliers that have voiced concerns of meaningful inventory in China, Mediatech being one having some problems in the December quarter, one of the power amplifier companies in the US having some problems, Jeffrey what dynamic is happening that they’re seeing such a very different market from maybe what you’re seeing, and actually some of the other Chinese handset vendors there?

Jeffrey Kang: You know, overall I think in terms of, I think this is the [claim of] the soft demand of the Chinese market is just, company specific. From our view, we didn’t see the weak demand from the overall market, so even for the power amplifier business, we still saw some strong demand from our partner like Skyworth . We saw there demand for the Skyworth TA very strong, so we, so from that angle we didn’t see any, you know, like too much of the weak from end market, so again, we still hopefully have our own view, we believe the inventory is very healthy in the end market. And even some specific companies have problems, it’s just in some specific individual case rather than the overall market problems, so we still believe the first quarter, the sales for [COGO’s] handset market should perform better than what we expected.

Brian White: Okay, and just finally Jeffrey, what type of growth did we see in handsets sequentially from the September quarter to the December quarter?

Jeffrey Kang: We see, do you mean for COGO or for the overall market?

Brian White: For COGO.

Jeffrey Kang: For COGO we have around 19% of growth quarter-over-quarter.

Brian White: 19%? Okay.

Jeffrey Kang: 19%.

Brian White: Great, thank you.

Operator: Thank you. Next question comes from Amir Rozwadowski with Lehman Brothers. Please go ahead.

Amir Rozwadowski: Good evening Jeffrey, Frank and Hope. A couple of quick questions if I may: Jeffrey, you had mentioned that you’re baking in some of the impact on some of the severe weather that’s going on in China at the moment – I want to know if you could give us any color around where you expect overall seasonality to fall; whether or not you expect some impact from the seasonal patterns, you know, first quarter of 2008?

Jeffrey Kang: You know, many, I think you know many investors know there is a snowstorm in the middle of China at this time and has some impact to this, causing some chaos in terms of the manner of transportation. Now, I think overall the saturation is just, we didn’t see any significant impact to the overall economy or in terms of consumer spending, so we just are thinking, we are seeing the situation is improving in the last few days, and we feel that’s why we still believe that the consumer spending will continue improving during this holiday season since next week. We continue to go into see very strong and customer demanding or consumer spending power in the, since the, during the Chinese holiday season.

Amir Rozwadowski: Okay, great. And then also Jeffrey, in the press release, you had mentioned that one possible area of growth could be India? I want to see if you could possible elaborate on that. Do you expect to expand your relationships into the region or is it through your existing relationships or acquisition? How should we think about that?

Jeffrey Kang: We go to India through our customers, so as you know, if you look at it, where our customers [are], like Huawei and ZTE we’re there, you know the handset goes. They go to the India market or they got to Brazil, they go to the Middle East, so overall our strategy is, we didn’t go to India directly. We go to the new international emerging markets along with our customers. So that is still our fundamental strategy. We stick with our Chinese customers and go where they go.

Amir Rozwadowski: Great. That’s very helpful. And then lastly, I know you had touched upon some of your expectations on the M&A front and I was wondering if you could give us a little bit of color as to when we should perhaps start to see some of those announcements or whether or not, you know sort of, if you could give us a little bit of color as to what stage you are at with some of those processes.

Jeffrey Kang: We have two deals in our pipeline, which is actually in the final stage, so we probably I think investors are probably going to see you know one or two announcements in the next you know, in this quarter or in the near future. As I just … just mentioned, we always place integration in, ahead of you know closing a deal. So basically you know, we’re still, a lot of the investors are asking me, do we have many opportunities to acquire business? Yes, we have a lot of opportunities, but at COGO we are a very disciplined company, so we always view the long term growth, long term fundamental is the most important thing for us to consider. So that’s why we always put integration ahead of closing a deal. So that’s why usually, always for us it takes us three to six months to close a deal. …We actually have deals in our pipeline which is already in the final stages. We will report it to the investors when the integration has been implemented.

Amir Rozwadowski: Great. Thank you very much for taking my question.

Jeffrey Kang: Thank you.

Operator: Thank you. Next question comes from Ramesh Misra with Collins Stewart. Please go ahead.

Ramesh Misra: Good evening folks and thanks for taking my questions. My first question is in regards to these acquisitions, Jeffrey. Can you talk about what are the areas of focus, and not just for the two that are in the pipeline, but what are the areas that you’re looking at to further expand as the year progresses?

Jeffrey Kang: We, as we explained to investors, our acquisition strategy is we want to leverage our existing broad customer base in China and find some complimentary product solutions and a service company in which you know we are able to leverage our existing platform and customer base. So, in the industry we are looking at, certainly including like the cell phone, like the digital media segments. We are also looking [at] like the auto electronics, like the green energy segments, so we believe in all the industries we are looking at, is kind of meet our M&A principal, [which] is a large, high-growth industry in China and is a fragmented market and at COGO we are able to leverage our strong position and unique business model to capture the high growth opportunities there.

Ramesh Misra: Okay, and do you anticipate these acquisitions to have a positive impact on gross margins? (audio gap)

Ramesh Misra: Great, great. Okay, great. I didn’t do anything, Jeffrey. So my question was in regards to gross margins. Do you see these acquisitions being accretive to gross margins in the near term?

Jeffrey Kang: I think you know the gross margin overall, we strategically choose the new business which has a gross margin of at least, you know, in line or usually better than our existing overall gross margins. So that’s why I believe the acquisitions usually will help to lift our overall margins.

Ramesh Misra: Okay, and my final question, Jeffrey is in regards to the exchange rate against the US dollar. How do you see that impacting COGO?

Jeffrey Kang: Well, I think you know that’s the positive impact. You know, basically because most of our revenue has been focused in Chinese currency, so you know, if with Chinese currency appreciation, we certainly believe this year will have another 5 to 10% you know currency appreciation, and that will help to improve our revenue and EPS So that’s why, and I think [in the] long term is good for us.

Ramesh Misra: Okay, great. Thanks very much.

Jeffrey Kang: Thank you.

Operator: Thank you. Next question comes from Adele Mao with Susquehanna Financial Group. Please go ahead.

Adele Mao: Hi. I would like to discuss a little more on several emerging areas that you mentioned as long-term growth drivers. First of all, could you explain how green energy fits in your current business model; whether it’s, you know, cross-selling to existing … current customer base or product synergy across your product platform?

Jeffrey Kang: You know, the green energy is one of the new growth, new territory to us. We actually still use the same business model. In the green energy industry we are looking at is not energy generation, but is more like an energy saving segment. For example, we can partner with our chipset vendors to design the module and the system to save electricity consumption, so this type of energy saving solution. So in terms of what we’re doing with the new design module of subsystems, and to… give me one second. So… are we in the conference right now?

Operator: Please continue.

Hope Ni: You are, you are.

Jeffrey Kang: So, to continue with Adele’s question, so we are, in terms of what we are doing in the green energy segment, it’s just exactly like what we are doing in the digital media and other segments. We are the module and the subsystem designer, the design is you know a green energy solution to serve the industry and it’s just the different applications. In terms of the leverage, so you know some of our green energy customers is, some of them is our existing customers, for example, you know customers like Emerson, a customers like Siemens who produce the power supplies. So they’ve already been our customers. So that’s why, out of this segment, in this segment, is we just offer some additional applications to them. So we believe, you know, this business, even though it’s new to the investor, but it’s not new to COGO. We just extended our solution, our technology into this new segment, which happened to be the high growth, high potential business in China in this year.

Adele Mao: Thank you, that’s helpful. And you mentioned earlier that auto electronics and free energy will collectively contribute about 5% of total revenue for 2008?

Jeffrey Kang: Yes.

Adele Mao: Okay. The second area I would like to ask you about is education technology. What kind of margin profile we are expecting, and how big of a growth we could expect for 2008? I may have missed that when you sent through the different segments.

Jeffrey Kang: This business belongs to our digital media segment, so I think that the margin, because we are focused on this customized module solutions for the high-end English learning device, this education technology products market, so I think the market is in line with our digital media business, which is over 20% of the gross margin. In terms of the business, we won some business since last year and we’ve served over 20 to 30 customers in this segment. And this is an over $3 billion market in China and, with 20 to 30% in annual growth market in China. Because we are only running our business in high-end solutions in this segment, we are going to submit a new revenue contribution in this year, so that’s why along with our other business, so this will help us to deliver over 40% of the growth from the digital media segment in this year.

Adele Mao: I see. You mentioned you serve 20 to 30 customers in education technology. I mean there are probably you know a dozen well known brands in the education device market. Who are your customers exactly?

Jeffrey Kang: Yeah, we have, most of them, this is a very niche market in China made up mostly of/ targeting Chinese domestic market, so we almost covered everyone in the segment, in the companies likesome companies are in the US, some are domestic, private companies, so we’ve pretty much covered everybody in the segment. Companies like Wanlida, for example, Neil/ Niel… what’s the name, the English name? Noah? that company just listed on the US. [Noah Education Holdings Ltd. ("Noah") (NYSE: NED)] So, we have covered all those players in China.

Adele Mao: Okay, I see. Okay, lastly, are you still projecting KA being 10% of your total revenue in 2008?

Jeffrey Kang: Yes, correct.

Adele Mao: Okay. Great, thank you.

Jeffrey Kang: Thank you.

Operator: Thank you. Our next question comes from James Faucette with Pacific Crest. Please go ahead.

James Faucette: Thanks very much. I just wanted to get a handle on as you go into 2008, obviously you’re looking for quite good growth again this year. I’m wondering if you could give us some insights into how well booked, or at least have initial indications on that growth rate that you talked about for this year.

Jeffrey Kang: You know, basically we are, you know COGO, our business has a very good visibility. We are a covered of almost every player in each segment and we first have to win the design from each of our customers, well, from each of their projects and then our customers give us their projections and after we’re connecting each customer’s projection and we will do our internal model to view this, overall customer demand versus the overall market demand with what we, you know. So that’s one I think we do an internal adjustment and it comes out our own projections. So overall our business has very visibility, so that’s why, and based on our current customers’ demands. For example, I just want to give you the telecom infrastructure as an example. Huawei was one of our top 10 customers, last year in ’07, Huawei you know the contracts signed totaling around $16 billion US and this year in ’08, that new plan, is like $23 billion US, a growth of over 40%. Their cell phone handset business in ’07, they actually delivered roughly 30 million units and their plan in ’08 is like 68 million units. So we have a very detailed plan from there. Each project, each model and each territory and then based on within each model, the module we have design win and then we come out with our own projections on revenue from Huawei and then in a similar way to deal with each of our customer. So that’s why COGO, because we always have a very good visibility and we are always able to deliver a good number which meets our estimation.

James Faucette: That’s very useful. Thank you. And then speaking more specifically to some of that visibility, obviously there’s been the expectation that the Olympics there in China will help drive consumer electronic sales, particularly of televisions this year – at what point would you expect that demand to start, at least as it impacts your business, start to wane and slow down and I guess as we get into the second half of the year as the Olympics have wound up, are you expecting any type of step-down or what do you think the growth rate in the consumer electronics group will be after we get past the Olympics?

Jeffrey Kang: I think you know people a little bit overestimate, overstate the impact of the Olympics. So I think the Olympics you know, that a direct impact is very limited and I think the strong growth driver for our digital media business is consumer spending and power. So this, as you know, the Chinese consumer spending is just been released, so while we are not going to see any softer demand in terms of the consumer spending in the next 10 years. So that’s why, we didn’t see too much of a difference before the Olympics or post-Olympics in terms of the consumer spending power. And we might have a little bit of a different view we think, right now, because the Chinese government imposed a very tightened, demanding policy, so that’s, in order to curb the over white-hot growth in the domestic market, domestic economy. So that’s why we think, our view is the government is probably going to release those control when it’s closing to the Olympics, so that’s why we believe the growth rate is going to accelerate after the Olympics. So this is our view about the breakdown before the Olympics and post Olympics.

Hope Ni: I also want to just add I think you know we have always said the Olympics had a very positive impact on our digital media, and I just want to distinguish what Jeffrey just said. The reason Olympics has a positive impact is each of these event, everybody has an incentive to come up with new features. So for example like a mobile TV has become sort of a new product. Everybody wants to have a mobile TV so they can watch the game during Olympics time. However, this new feature is supposed to come out prior to the Olympics time, but after the Olympics time those new features will still be popular. You know, so right now it’s, in a way it’s very helpful to us is because there is a major event coming and all our customers are pushing out new models or new features, which benefits us. But then after Olympics those new features, new models still will be used by consumers. Again, our fundamental driver for our business is the consumer demand spending power.

James Faucette: That’s very helpful. Thank you.

Operator: Thank you. And ladies and gentlemen, if there are any additional questions, please press the star followed by the one at this time. As a reminder, if you are on speakerphone, please lift the handset before making your selection. And our next question comes from Quinn Bolton with Needham and Company. Please go ahead.

Quinn Bolton: Hi, Jeffrey. I jumped on the call late, so I apologize if this was already addressed, but can you talk about the mix within your handset business? How much of the handsets are for domestic consumption and how much is export?

Jeffrey Kang: You know, it actually varies from quarter-over-quarter, and in the fourth quarter I think the domestic companies shipped around 30 million units for the domestic markets and roughly 20 million units for the exporting. That’s the data for the fourth quarter. But actually for overall for ’07, the whole year, 110 million units have been shipped into the Chinese domestic market from the Chinese domestic players and roughly 60 million units have gone to the international market. So, you know, basically because of the different seasonality, so the percentage is different, it varies from quarter-over-quarter. But one of the trends we are seeing is you know the cell phone exporting is just starting since last year, since ’07, so in ’08 not only will we see a strong domestic growth, we will see another strong growth from the exporting. And overall I think in terms of the growth rate, in exporting growth rate should be much higher than the Chinese domestic markets.

Quinn Bolton: Okay, great. And then can you talk about just the sort of monthly trends you’ve seen sort of here in January and what you would expect in February with Lunar New Year?

Jeffrey Kang: Overall I think the trend is quite healthy. I, basically you know, especially after the slowdown in December, and because December is not as strong as people expected. Overall, in January, the market demand is quite strong. Even for example for us we see our order flow is very strong in January. So that’s why I think if the Chinese New Year holiday season started next week, we believe the consumer spending will also show a very strong favor in the next couple of weeks. And then if that’s the case, we are going to say the whole cell phone market will rebound since March. So this is our existing view about the market. And also, that’s with the domestic market. For the exporting, and we will also see a very strong ramp-up from Huawei and ZTE in January and February, you know, these two months.

Quinn Bolton: Great. And then just lastly, were there any 10% customers in the fourth quarter?

Jeffrey Kang: No. In the fourth quarter, ZTE still is our largest customer and is around 9% of our total revenue.

Quinn Bolton: Okay, they were closer to 20% in the third quarter if I’m not mistaken, is that right?

Jeffrey Kang: Yeah, that’s going to be, you know, it happened to be in just September, you know, we have a lot of shipments to them in the last few weeks, so that will cause you know varying revenue concentration in that specific quarter is very high, but in terms of the fourth quarter, because we have many other customers, you know, getting more allocation from in terms of the products. So that’s why we are seeing, you know, it comes from a much normal situation.

Quinn Bolton: No, that’s great. Thank you very much.

Operator: Thank you. And management I’m showing that there are no further questions. We’ll turn it back to you for closing comments.

Jeffrey Kang: So thanks very much. We, our focus over the past five years has been on creating a pattern of sustainable and solid growth for the Company. We believe providing long term, robust growth has been much more valuable than having one or two high performing years or quarters. We are optimistic about maintaining our consistent growth pattern in 2008 and the next few years. Thank you all for joining this call. Hope to talk with all of you next time. Thanks.

Hope Ni: Thank you.

Operator: Thank you. Ladies and gentlemen that will conclude today’s teleconference. We do apologize for the technical issues. We thank you for your participation and at this time you may disconnect.

About Comtech Group, Inc.:
Comtech Group, Inc. (NASDAQ:COGO) is a leading provider of customized module and subsystem design solutions in China. The Company believes it acts as a proxy to China's technology industry as it works with virtually all the major ODMs and OEMs in China. Comtech leverages these relationships and combines their IP to create designs that Comtech then sells to electronic manufacturers. These designs allow manufacturers to reduce their time to market for new products and ultimately increase sales. Comtech Group focuses on the digital media, mobile handset and telecommunications equipment end- markets for its customized design modules while also offering business and engineering services to its large telecom equipment vendor customers. Over the last eleven years, Comtech has grown its customer list to include more than 200 of the largest and most well known manufacturers across the mobile handset, telecom equipment and consumer markets in China, covering both multinational Chinese subsidiaries and Chinese domestic companies.