UTStarcom beats EPS estimates; issues weak guidance; stock down 7% in AH (UTSI 2Q05 earnings results)

| About: UTStarcom, Inc. (UTSI)
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UTStarcom (ticker: UTSI) reported weak Q2 2005 earnings results as the company continues to restructure its operations. Key stats from the quarter:

Q2 Results:
(all percentage changes and comparisons are year on year, unless stated otherwise)

  • Revenue rose 4.8% to $723.0 million vs consensus estimate of $735.08 million.
  • Unrelated party revenue rose 3.6% to $692.3 million.
  • Related party revenue rose 45.4% to $30.6 million.
  • Gross margin was 15.1% vs 25.6%.
  • Operating expenses rose 52.6% to $191.0 million.
  • SG&A expenses rose 51.6% to $102.8 million.
  • Research and development expenses rose 24.8% to $65.6 million.
  • In-process research and development expenses fell 52.9% to $660,000.
  • Operating loss of $81.5 million vs operating income of $51.1 million.
  • Net loss of $74.7 million vs net income of $44.0 million in Q2 2004.
  • Loss per share of $0.65 vs earnings per share of $0.33, and vs consensus loss of $0.77.
  • Note: Excluding restructuring charges and other items -- net loss of $51.6 million and loss per share of $0.45.

Q3 Guidance

  • Total revenue of approximately $660.0 - 680.0 million versus consensus of $778.39 million.
  • Gross margin of 15% - 18% -- not including PCD: 30% - 32%.
  • Restructuring charges of approximately $5.0 - $10.0 million.
  • GAAP loss per share of approximately $0.35 - $0.40 including restructuring charges vs consensus loss of $0.08.

Balance Sheet

  • Cash and equivalents of $350.3 million as of June 30, 2005.

UTSI chart.


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