UTStarcom: Good Vibrations

By David Weissman

We expect UTStarcom, Inc. (UTSI), a provider of IP-based telecom equipment, to receive further demand for its IPTV solutions as mobile TV systems become increasingly popular in China and India due to nationwide deployments of 3G wireless networks.

UTStarcom's transformation from a mobile handset developer to an IPTV and optical transport solutions provider has been favorably implemented.

Moreover, the company's current valuation is below its net cash position. At the end of the first quarter, the company had approximately $2.41/diluted share of cash position with no outstanding debt.

On the other hand, the markets for IPTV solutions and intelligent switching products are highly competitive and this, together with global economic weakness, may hinder efforts to improve the company's earnings power.

We do not expect UTStarcom to achieve profitability any time soon. While we maintain our Hold rating, due to higher risk levels, we forecast a higher valuation target over six to twelve months.

Comments

[Nyetnichevo:]

Yes, UTSI for the long haul, stock is cheap now. In three years it could easily be a ten bagger. IPTV is the future, though the current /past/management team has made every mistake imaginable, I continue to hold.

May 28 02:24 PM

[Nyetnichevo:]

Recent upward movement could also be indicative of a suitor in waiting. Cisco seems logical.

May 28 10:15 PM