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Telestone's CEO Discusses Q2 2012 Results - Earnings Call Transcript.

This year, we have deliberately moderated our top line growth in order to improve collections so that we can position Telestone for a return to growth and focus on developing our U-DAS, or WFDS and TIPS technologies.

The following are the key points in Telestone's business performance in the second quarter of 2012, revenues were $17.9 million, a decrease of 26.6% as compared to $24.3 million in the year-ago quarter. Gross profit was $6.6 million, as compared to $10.6 million in the year-ago quarter.

Net loss was $1.3 million, or $0.09 per diluted share; non-GAAP net loss was $1.2 million, or $0.08 per diluted share. In addition, during the second quarter a related company received an initial RMB2.5 million or US$0.4 million investment from Zhongguancun Development Group for the research, development and commercialization of Telestone Intelligent Premise System Technology.

This investment is part of a RMB15 million or US$2.4 million total commitment awarded in May, which the Group is expected to fulfill over the next three to five years.

John Harmon

Now, I will read Telestone's second quarter 2012 financial commentary. Revenues in the second quarter of 2012 were $17.9 million, a 26.6% decrease from $24.3 million in the year-ago quarter. The year-over-year decrease in revenue was primarily attributable to a slow start to 4G network construction, the maturity of 3G deployment, intensified competition, and the Company's strategic moderation of growth in certain cities with longer accounts receivable collection periods.

Equipment sales decreased 32.6% to $6.0 million from $8.8 million in the year-ago quarter. Sales of Professional Services declined 23.2% to $11.9 million, as compared to $15.5 million in the year-ago quarter. Equipment sales declined more than sales of professional services due to market share changes in a more competitive equipment market.

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