"As part of this strategy, the Company will divest its IPTV equipment business, which will become a privately-held standalone company. Once the divestiture transaction closes, Mr. Jack Lu will lead the new IPTV equipment business, thus leaving his position as UTStarcom's Chief Executive Officer. The divestiture is a means of effectively redeploying capital to support higher return opportunities, particularly in the value-added services area. It accelerates UTStarcom's ongoing transition into a higher growth business and will have an immediately positive effect on the Company's margin structure and profitability profile. The IPTV business currently accounts for approximately one-third of revenue and is expected to negatively contribute to the overall Company results. This strategic initiative will significantly reduce UTStarcom's expenses by US$17 million per year."
I do have questions though.
1) Why the convertible bond? 2) What ownership in the IPTV business will Lu have? 3) Why all the hype over the potential for IPTV over the last few years? 4) Why not show the financials for the IPTV business to back up their reasoning for divesting it? 5) Shouldn't they receive compensation for the divestiture?
Quote from recent article:"I am not expecting the stock to drop below $1 level. The company has net cash of $1.86 per share". Here is the problem: UTSI has been trading below cash for how long? If recent relative weakness is any indicator what would be possible catalyst to keep pps above $1 when broad market slows down or corrects? jp
Hey guys! Can't you accept the fact that this Market is different animal all together. UTSI and ALU have been trading in tandem.In last few days ALU made new all time lows.Do you really hope UTSI starts outperforming ALU when the management announced/confirmed low growth stage ahead. Making steps to solve this problem is good thing but it takes time and Mr.Market will try to test your patience by attemping to find and flush out all weak hands. Hopfully I'm wrong again. jp