UTStarcom: divestiture of IPTV equipment business expected to close end-Aug

theflyonthewall.com

On July 27, the company announced strategic initiatives to advance its efforts to transition into higher growth, more profitable areas and enhance the value of the Company's business. These initiatives include the divestiture of the company's IPTV equipment business and the appointment of Mr. William Wong as CEO of the company to succeed Jack Lu, who will leave UTStarcom to lead the IPTV equipment business once the transaction closes. At present, Wong, who has joined the company as its COO, and Lu are working together to ensure a successful completion of the divestiture transaction. The company continues to expect the transaction to close by the end of August and the leadership transition will take effect at that time. As recently announced, the divestiture of the IPTV business is expected to eliminate approximately $17M in annual operating expenses, will remove a portion of the business that has rates of return that are lower than those generated by other parts of the Company, and will leave the company with higher margin business lines. Based on current market conditions and assuming the IPTV transaction closes at the end of August as expected, the company expects continued healthy revenue growth within its remaining businesses, with average gross margins expanding to over 35% and break-even operational cash flow in 2012.

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