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UTStarcom Announces New Strategic Plan to Drive Growth and Profitability and Enhance Shareholder Value

BEIJING, Nov. 15, 2012 /PRNewswire/ -- UTStarcom Holdings Corp. ("UTStarcom" or the "Company") (Nasdaq: UTSI), a leading provider of media operational support services and broadband equipment products and services, today announced a strategic plan to transform UTStarcom into a higher growth, more profitable business focused on providing next generation media services. The strategy builds on recently announced initiatives, such as the divestiture of the IPTV equipment business, acceleration of the media operational support services business, and appointment of new executive leadership. The new plan is expected to result in significant overall improvement in UTStarcom's business performance and the Company anticipates it will lead to accelerated rates of growth and profit margins.

In a separate press release issued today, the Company also announced unaudited results for the third quarter ended September 30, 2012.

New Strategic Plan

UTStarcom's new strategic plan will build on the Company's past transition initiatives and transform it into a higher growth, more profitable business focused on media operational support services and broadband equipment products and services. UTStarcom aims to become a next generation media company and participate in new and higher-margin business areas where it has the potential to become the top one or two service providers.

William Wong, UTStarcom's Chief Executive Officer, stated, "The strategic plan we are announcing today stems from the new management team's close collaboration with the Board of Directors to identify the most appropriate ways to accelerate revenue growth, bolster profit margins, improve operational cash flow, generate a more predictable, subscriber-based recurring revenue stream and increase shareholder value."

"Further, this is the next major initiative for us in a series of steps we are taking to truly transform the Company, including divesting the underperforming IPTV equipment business, investing in aioTV, hiring a new Chief Financial Officer, and adding new independent directors to our Board.  Our overarching intention is to leverage our extensive experience, technical expertise, and customer relationships while repositioning the Company for long-term growth by tapping into major shifts in behavior and technologies that will change the way people consume entertainment for generations to come."

There are recent trends in how people consume entertainment via multi-screens as well as customized viewing driven by consumers seeking a "pull" approach to TV. This has led to the phenomena of "cord cutting" as viewers give up their cable and television services in favor of largely Internet-based content platforms that allow them to select videos and entertainment on their own terms. UTStarcom intends to become a leader in providing next generation media services that will meet the critical needs of its key customers – cable and broadband service providers – as they look to offer a more personalized entertainment experience and build up their own customer base.

In order to be well-placed to evolve and meet this market demand, the Company has identified three primary strategies.  The Company will:

  • Deploy a TV over IP Services Platform:  UTStarcom will build a major business line around TV over IP services, which offer some of the fastest-growing and highest-margin opportunities in the marketplace. Through TV over IP services, UTStarcom will aim to be a leading provider of high-in-demand digital content, such as local content, premium licensed content, and other value-added services over a variety of platforms to the mainstream consumers.  UTStarcom will offer a Cloud based, integrated platform to support the entire workflow of broadband and cable service providers' TV over IP operations, such as encoding and transcoding, program planning, media distribution, content publication, and product management.
  • Pursue Internal Product Development and Strategic Acquisitions to Build Out New Services: UTStarcom will leverage its strong technical expertise to develop solutions in-house that will support the new TV over IP platform. Importantly, the Company will also seek to acquire or take significant stakes in companies that have market-leading technology that UTStarcom can use to augment its services platform and then deploy commercially, quickly and efficiently.
  • Design an Optimal Operating Structure to Maximize the Potential of Business Units and Foster Innovation, Collaboration and Efficiency: UTStarcom will structure its business in a way that aggregates and maximizes the potential of its existing and to-expand business units by providing them the flexibility to pursue opportunities while also aligning their interests with broader corporate goals and those of shareholders. The Company will also aim to maximize efficiency in operations and minimize fixed costs in order to keep the underlying business strong.

The Company expects the adoption of this new strategic plan will in time result in a more predictable, recurring revenue stream based on an array of sources, including subscription fees, platform licensing fees, and fees on value-added services as well as higher margins due to the increased profitability of these revenues. UTStarcom will be focusing its growth efforts in China and across Asia and based on current plans, the Company expects to invest in and launch its TV over IP services in multiple countries during 2013.  The Company anticipates revenue from the new TV over IP services to become the majority revenue contributor for UTStarcom by 2015, with gross margins in that line of the business exceeding 50% in that same timeframe.

Importantly, UTStarcom is embarking on these plans from a position of strength. With total cash of $213.1 million as of September 30, 2012, the Company has sufficient capital to fund these strategies. The Company will also leverage its established relationships with broadband and cable service providers as well as its in-house technical expertise to guide product development and identify and pursue acquisition and investment targets in an effort to execute its strategic plan and meet overall long-term targets. 

Mr. Wong concluded, "We are confident that our new strategy will take us in the direction in which the market itself is moving and positions us well to capitalize on developing new media opportunities.  We are moving aggressively to implement our strategies and while full traction will take time to develop, we are confident that our success will ultimately result in profitable, sustained growth and improved value for our shareholders.  We are excited by what is in front of us and look forward to updating our customers, employees and investors as we achieve new milestones."

Conference Call Details

UTStarcom's management will host an earnings conference call at 7:30 a.m. U.S. Eastern Time on Wednesday November 15, 2012 (8:30 p.m. Beijing/Hong Kong Time on November 15, 2012).

The conference call dial-in numbers are as follows:

United States: + 1-800-860-2442

International:  + 1-412-858-4600

China: 10-800-712-2304

Hong Kong: 800-962475

The conference ID number is 10021309.

A replay of the call will be available one hour after the end of the conference until 9:00 a.m. U.S. Eastern Time on November 23, 2012.

The conference call replay numbers are as follows:

United States: + 1-877-344-7529

International:  + 1-412-317-0088

The conference ID number for accessing the recording is 10021309.

Investors will also have the opportunity to listen to the live conference call and the replay over the Internet through the investor relations section of UTStarcom's web site at:

About UTStarcom Holdings Corp.

UTStarcom is focused on providing next generation media operational support services in the rapidly growing markets for TV over IP services and broadband equipment products and services.  UTStarcom is committed to meeting the evolving needs of cable and broadband service providers to enable a more personalized entertainment experience. The Company sells its media operational support services and broadband equipment products and services to operators in both emerging and established broadband and cable markets around the world.

UTStarcom was founded in 1991 and has traded on the NASDAQ since 2000. The Company has its operational headquarters in Beijing, China and research and development operations in China and India. For more information about UTStarcom, visit the Company's website at

Forward-Looking Statements

This press release includes forward-looking statements, including statements regarding the Company's expectations relating to the deployment and growth its operational support services business. These statements are forward-looking in nature and subject to risks and uncertainties that may cause actual results to differ materially and adversely from the Company's current expectations. These include risks and uncertainties related to, among other things, changes in the financial condition and cash position of the Company, changes in the composition of the Company's management and their effect on the Company, the Company's ability to realize anticipated results of operational improvements and benefits of the divestiture transaction, the ability to successfully identify and acquire appropriate technologies and businesses for inorganic growth and to integrate such acquisitions, the ability to internally innovate and develop new products, assumptions the Company makes regarding the growth of the market and the success of the Company's offerings in the market, and the Company's ability to execute its business plan and manage regulatory matters.    The risks and uncertainties also include the risk factors identified in the Company's latest Annual Report on Form 20-F and Current Reports on Form 6-K, as filed with the Securities and Exchange Commission. The Company is in a period of transition and the conduct of its business is exposed to additional risks as a result. All forward-looking statements included in this press release are based upon information available to the Company as of the date of this press release, which may change, and UTStarcom assumes no obligation to update any such forward-looking statement.

SOURCE UTStarcom, Inc.