UTStarcom Cuts 2,300 Jobs
The company has announced a number of cost-cutting measures during the past few years, but in terms of magnitude this is its biggest single action. By the end of this year, the vendor will have less than 2,000 staff, who will be focused mainly on IP-based infrastructure opportunities in India and China. (See UTStarcom Cuts Costs, Staff, Axe Falls at UTStarcom, China IPTV Goes Mobile via UTStarcom , China Set for IPTV Explosion, UTSI, Optibase Land Goa Gig, and UTStarcom Wins India Deal.)
CEO Peter Blackmore told a conference call late Thursday that the initiatives are "aimed at returning UTStarcom to profitability as quickly as possible," and that the restructuring efforts of the past 18 months had moved the company in the right direction.
"Today we have a simpler, more focused company... Our position has improved materially since the end of 2007, and we're showing positive momentum in terms of bookings growth," stated Blackmore. In July 2008, the company sold its Personal Communications Division, which historically had accounted for a majority of its revenues. (See UTStarcom Sheds Some Wireless Weight.)
In addition, the company will streamline its sales operations, reduce support for older product lines, and outsource its manufacturing by the end of 2009. The company's product portfolio by the end of this year will be composed mostly of IPTV and fixed broadband access systems, which generate gross margins in the high 20 percent range, plus a small lineup of high-end mobile handsets for the Chinese market.
Once the restructuring actions (which will result in charges of about $45 million) have been completed, Blackmore believes the company will be able to turn a profit on annual revenues of about $350 million. "We are confident we can achieve and exceed this level of revenue," stated the CEO.
For the full-year 2008, discounting any Personal Communications Division sales, the company reported revenues of $634 million and an operating loss of $199 million. For the first quarter of this year, UTStarcom reported revenues of $119 million.
Those figures are a far cry from the vendor's past: In 2006, for example, the commpany reported full-year revenues of $2.6 billion. (See UTStarcom Reports 2006 Earnings.)
UTStarcom's share price ended Thursday at $2.15, giving the vendor a market value of $275 million. It has about $300 million in cash and no debt.
– Ray Le Maistre, International News Editor, Light Reading