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Corporate Presentation NASDAQ: UTSI August 2011

Corporate Presentation NASDAQ: UTSI August 2011. Disclosure & Forward Looking Statements.

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Corporate Presentation NASDAQ: UTSI August 2011

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  1. Corporate Presentation NASDAQ: UTSI August 2011

  2. Disclosure & Forward Looking Statements This investor presentation contains forward-looking statements, including statements regarding the Company's strategy to reduce operating expenses, ability to achieve profitability, investment in selective products and certain geographic regions, diversification of business and customer base, transition to a new business model and anticipated or assumed future financial results. Forward-looking statements are based on current expectations, estimates, forecasts and projections about the Company, the Company’s future performance and the industries in which the Company operates as well as on the Company management's assumptions and beliefs. These forward-looking statements are only predictions and are subject to risks and uncertainties related to, among other things, the ability of the Company to realize anticipated results of operational improvements, increase bookings, successfully transition to a new management team and headquarters location and execute on its business plan, as well as risk factors identified in its latest Annual Report on Form 10-K, as amended, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as filed with the Securities and Exchange Commission. Therefore, actual results could differ materially and adversely from the Company's current expectations. We undertake no obligation to update these forward-looking statements to reflect events or circumstances occurring after the date of this investor presentation. The Company is in a period of significant transition and in the conduct of its business is exposed to additional risks as a result. This investor presentation also includes financial guidance and information about the Company previously disclosed during the Company's 2009 and 2010 earnings conference calls, restructuring announcements on December 18, 2008 and November 9, 2009 and other filings with the Securities and Exchange Commission. Such guidance and information reflects the Company’s information and expectations as of those dates and this presentation is not intended to confirm or update that information and expectations.

  3. 1 2 3 Agenda Corporate Overview Market Dynamics & Growth Strategy Financial Overview and Outlook

  4. CORPORATE OVERVIEW

  5. Company Introduction • A leading provider of interactive, IP-based network solutions in iDTV, IPTV, Internet TV and Broadband for cable and telecom operators • Technology and services expand and help modernize communications networks, giving operator customers the capability to provide their subscribers with interactive communications experiences while opening up increased revenue opportunities for operator clients • The new service business represents a “business model innovation” that leverages UTStarcom’s current core technology and management background to generate more recurring, higher margin returns. Share Price: $1.37 (as of July 30, 2011) Shares Outstanding: 156.1 m Market Cap: $213.9 m (as of June 30, 2011) Legal Counsel: Wilson Sonsini Goodrich & Rosati Auditors: Price Waterhouse

  6. Investment Highlights • Focused on achieving breakeven in 2011 • Strong existing relationships with leading telecom, cable and media players in China and across the rest of Asia • Well positioned to benefit from China’s Three Network Convergence policy and development • Diversifying business model into high-margin new service business (“Operation Support Business”) with recurring revenues • Diversifying customer base to broaden profit opportunities • Strong cash position and no debt

  7. Our Positioning and Growth Strategy A leading provider of interactive, IP-based network solutions in iDTV, IPTV, Internet TV and Broadband to cable and telecom operators Strategy 1: Return to China Strategy 2: Telecom and Cable in Parallel Strategy 3: Equipment AND Service • Enables focus on Chinese and Asian markets • Leverage Three Network Convergence (TNC) policy in China • Senior management close to client decision-makers • Improved internal communication & lower costs • Core IP technology applied across different networks • Strong competitive edge and opportunity with both telecom and cable operator • Demand for interactive services creates opportunity for equipment AND services revenues with higher margin earnings • New service business model moves UTStarcom up the value chain and closer to interactive TV operators Our existing telecommunication equipment products, RollingStream technology and sales channels are the foundation of new service business, which taps a major opportunity in video content services over the broadband network and internet.

  8. RollingStream Technology Video Storage and Streaming Servers OSS IP STB Dual-mode STB

  9. Broadband and NGN Solutions TN725 TN705 NetRing 4K NetRing2500 BBS 4000 ONU Media Gateway Call server

  10. Market Dynamics & Growth Strategy

  11. China’s Three Network Convergence: a growth catalyst for UTStarcom • Three Network Convergence (TNC) is the Chinese government policy dedicated to integration of telecom, broadband and cable TV networks • Three Network Convergence related market will reach RMB 688B over the next three years, including RMB 249B on equipment and network buildout and RMB 439B from interactive media user demand Pilots concluded and expansion drives ahead Focused on cable / teleco two-way entrance National Implementation Pilots Conducted Policy Launched 2013—2015 2010 2010—2012 Source: iChina Research Center, 2010.4, “Analysis of Market Size, Industry and Region for Three-Network Convergence” and policy directives issued by China’s State Council.

  12. Strategy 1: Opportunities in Other Asian Markets

  13. Strategy 2: Parallel Growth Opportunities • TNC will increase opportunities with cable and telecom operators because of infrastructure investment • Our Broadband, RollingStream video platform and mSwitch NGN solutions help meet the TNC needs of both sectors Interactive video services 4million (iDTV) 6.7million (IPTV) Broadband service <5million >100million Bi-directional network percentage <25% 100% Voice services none >1 billion TV and Digital TV service 187 million 88 million none Source: SARFT Report January 2011 and UTStarcom

  14. Strategy 3: Our Operational Support Services • RollingStream platform allows our clients to provide end-to-end solutions including, video content service and other value added services like on-line gaming, on-line shopping and video phone service through their networks • Cable network operators need partners that can provide continued technological and operational support services for these platforms • Operational Support Services (OSS) expands our revenue stream with higher margin, recurring revenues Equipment Sales Related Service Business Enterprise Operators TV and Cable Operators Telecom Operators IP Signage Platforms iDTV Platforms IPTV, Internet TV Platforms

  15. An Overview of the New Service or “Operational Support Services” Business Content Producers /Providers Ad Management Solutions RollingStream Video Platform VAS Solutions Content Distribution Internet TV Platform by Stage Smart Acquisition Mobile TV Subscriber Base IPTV/iDTV Subscriber Base Internet TV Subscriber Base 15

  16. iTV.cn: Internet TV for Chinese outside China Q2 2011 Q3 2011 Q4 2011 launch subscription service to distribute content globally Launched non-commercial trial • Non-commercial trial underway in 300 households; mostly in North America • Integrated multi-screen viewing from a single managed platform • Time and location shifting • Reliable HD streaming • Multi-language programming • Value-added interactive service, such as distance-learning, gaming and e-commerce Education Social Shopping Gaming Radio 16

  17. Financial Overview and Outlook

  18. Second Quarter 2011 Highlights Net Income of $11.6 million, or basic earnings per share of 7 cents; UTStarcom’s first profitable quarter after 24 consecutiveloss making quarters Revenues of $92.5 million, a 26.4% / $19.3 million increase, compared to the same period of 2010 Gross profit margin of 37.6%, compared to 31.3% in same period of 2010 and 31.1% in Q1 2011 Operating income of $9.7 million Positive operational cash flow Cash balance of $316.4 million in cash, cash equivalents, and short-term investments Strong Financial Performance & Effective Cash Management 18

  19. Revenue Trend and Significant Items $92.5 million in Q2 2011, a 26.4% or $19.3 million increase, compared to $73.2 million in Q2 2010 and a 50.9%or $31.2 million increase when compared to Q1 2011. 1H 2011 total revenue was $153.8 million, an 0.1% or $0.2 million decrease, compared to1H 2010 19

  20. Booking Trend in Q2 Without PAS deferred revenue, book-to-bill ratio for the secondquarter was 0.85. With the PAS deferred revenue, book-to-bill ratio was 0.64. Actual booking amount increased from Q1 2011; however book to bill ratio dropped due to significantly higher revenue in Q2 2011. US$ (mm) 20

  21. Gross Profit Increased Gross margin for the second quarter of 2011 was 37.6% as compared to 31.3% in the second quarter of 2010 and 31.1% in the first quarter of 2011. Gross profit was $34.8 million in the second quarter of 2011 compared to $22.9 million in the corresponding period of 2010. US$ (mm) 21

  22. Continued Progress in Cost Cutting US$ (mm) 22

  23. Quarterly Profit Achieved Operating income of $9.7 million… US$ (mm) Net income of $11.6 million… US$ (mm) 23

  24. Segment Reporting Note: Deferred revenue related to PAS is included in equipment sales through the end of 2011 at the rate of $23 million per quarter. Gross margin associated with the PAS deferred revenue is approximately 35%. US$ (mm) 24

  25. Strong cash balance of $316.4 million in cash, cash equivalents, and short-term investment Zero debt Balance Sheet & Deposits Cash Balance by Region Cash Balance by Currency 25

  26. Positive quarterly operational cash flow of $12.0 million resulted from: 1) High collections– caught up from collections delayed in Q1 2011 2) More effective cash management 3) Strict control over inventory purchase Positive Cash Flow 26

  27. Reiterating 2011 Financial Outlook Total revenue targeted to be within the range of $300 – $320 million (includes PAS deferred revenue) Targeting annualized operating expenses of less than $100 million Targeting breakeven in 2011 on a full year basis Reiterate Delay in progress • Our target of generating 10% of total sales in 2011 from new OSS business is subject to the due diligence process and detail terms and condition negotiation on acquisition targets and revenue sharing projects which may result in delay. 27

  28. Ms. Jing Ou-Yang T: + 8610 8520 5153 E: jouyang@utstar.com INVESTOR RELATIONS CONTACTS

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