MCB900 reading SBUF problem

Hi. I am having a little problem.
I have my MCB900 evaluation board connected to a gsm modem via serial cable.
I have wrote a simple program to send out the "AT" command to the modem from the eval board.
I then read back on the serial and store the charters in a buffer and I then compare the
buffer and light the LEDs depending on what I get. At the moment I have the code set up that all 8LEDs light if I recieve "AT on the serial but I know it should be reading in "OK" from the GSM module.

Q. Do I have to clear SBUF after I send the message to the GSM modem and before I start to reading back from the GSM modem

/*------------------------------------------------------------------------------
------------------------------------------------------------------------------*/

#include <REG935.H>

#include <stdio.h>
#include <string.h>

int u=0;


int step = 1;
char sms[2];
void init(void);


/*------------------------------------------------
The main C function.
------------------------------------------------*/
void main() {



  SCON   = 0x52;                 /* initialize UART                            */
  BRGR0  = 0xF0;                 /* 9600 baud, 8 bit, no parity, 1 stop bit    */
  BRGR1  = 0x02;
  BRGCON = 0x03;
  ADMODA = 0x30;                 /* SCAN=1 single conversion                   */
  ADINS  = 0xF0;                 /* Enable AD10..AD13 inputs                   */
  ADMODB = 0x60;                 /* CLK: 1.5MHz for 12MHz XTAL                 */
  ADCON1 = 0x05;                 /* Enable+start A/D converter                 */

while (1) {

        if(u !=2){
                P2 = 0x01;
        }
        if(step==1){
                init();
        }

  }
}
void init(void){
        if(u !=2){
                P2 = 0x03;
        }
        if(u < 1){
                printf ("AT\n");    /*output AT message to modem*/
        }
        while (RI != 1) {;}     /*wait for serial input from modem*/
        sms[u] =  SBUF;    /*store modem message in buffer*/
        SBUF=0;/*clear SBUF*/
        RI= 0;
        u++;/*increment next character of message*/
        if(u==2){
                if(sms[0] == 0X41 && sms[1] == 0X54){    /*comparing if message from modem is "AT" should be "OK"*/
                        P2 = 0xFF;    /*if "AT" light all 8 LED's*/
                }else{
                        P2 = 0x1F;    /*else light 5 LED's*/
                }
                step = 1;
                }
}

.