Transcript PowerPoint Template

Corporate Presentation
NASDAQ: UTSI
March 2012
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. Forwardlooking 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 6K and 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, 2010 and 2011 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.
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Agenda
1
Corporate Overview
2
Market Dynamics & Growth Strategy
3
Financial Overview and Outlook
3
CORPORATE OVERVIEW
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
 Provide operators with increased revenue opportunities and subscribers
with enhanced interactive communications experiences
Share Price:
Shares Outstanding:
Legal Counsel:
Auditor:
$1.58 (as of March 13, 2012)
151 million
Covington & Burling LLP
PricewaterhouseCoopers
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Investment Highlights
 Achieved profitability 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
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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
• Concentrate on China and
Asian markets
• Leverage Three Network
Convergence (TNC) policy in
China
• Senior management closer to
client decision-makers
• Successfully improved
internal communication &
lowered costs
• Core IP technology applied
across different networks
• Strong competitive edge and
opportunity with both
telecom and cable operator
• Demand for interactive
services creates the
opportunity for equipment
AND services revenue with
higher margin earnings
• New service business model
moves UTStarcom up the
value chain and closer to
interactive TV operators
Existing telecommunication products, RollingStream technology and sales channels
serve as the foundation for UTSI’s new service business
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RollingStream Technology
SOLUTION AND VALUE
TO CUSTOMER
PRODUCTS OR SERVICE PROVIDED
TARGET
CUSTOMERS
RollingStream®
Technology: provides
customers market leading interactive TV
solutions
RollingStream enables operators to
1.Telecom
provide IPTV, iDTV, Internet TV, mobileTV, operators
video information and other industrial
applications. Hardware includes:
2. Cable
operators
Infrastructure
Components:
3. TV stations
and content
Video Storage and
OSS
license holders
Streaming Servers
who, in China,
run broadcast
Terminals:
control
IP STB
Dual-mode STB platforms
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Broadband and NGN Solutions
SOLUTION AND VALUE
TO CUSTOMER
PRODUCTS OR SERVICE
PROVIDED
TARGET CUSTOMER
Broadband Solution:
provides high
bandwidth network
infrastructure for
communications
networks
• PTN
1.Telecom operators
TN725
2. Cable operators
• MSTP
NetRing 4K
NetRing2500
• G/E-PON
BBS 4000
NGN Solution:
Provides a multiservice IP-based soft
switch system for
voice, data, mobile
and multimedia
operations
TN705
ONU
1.Telecom operators
2. Cable operators
Call server
Media Gateway
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Leading Market Position in China
Focus Area
UTStarcom’s Achievements
Interactive
Television
(including IPTV,
iDTV & Internet TV)
 Currently hold a leading IPTV market share in China
 Contracts won from both cable and telecom operators to expand
IPTV system - Zhejiang, Fujian, Anhui and Shenzhen
 Built 7 IPTV Broadcast Control Platforms in China
 Target Video Service Cloud Platform launch in Q1 2012
Smart Grid
 Approved as a qualified EPON supplier for China State Grid
Company
 The first EPON supplier to China’s electricity grid companies
 EPON product supplier to the Ningxia provincial electricity grid
company
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Leading Market Position in APAC Market
Market & Focus
Area
UTStarcom’s Achievements
Japan:
 Supply 50% of SoftBank Broadband (“SBB”)’s MSTP transmissions.
SBB is currently Japan’s 3rd largest telecom operator
 Preferred PTN supplier of next generation IP transmission
equipment for SBB
 Cumulative booking of higher-margin PTN products hit $100 million
Focused on
Broadband
Other APAC Market:  Won sizable MSTP and PTN contracts from Chunghwa Telecom
Focused on
Broadband
 RollingStream® infrastructure product sales increased in India
UTStarcom Confidential
Market Dynamics & Growth Strategy
China’s Three Network Convergence:
a growth catalyst for UTStarcom
Equipment Spending & Network
Buildout
Media
Platform
Spending
16%
Set Top
Box Sales
28%
Telecom
Network
Buildout
42%
Cable
Network
Buildout
14%
 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
Policy Launched
2010
Pilots Conducted
2010—2012
2013—2015
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.
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UTStarcom Wins in TNC
 In 2010, UTStarcom built 6 IPTV broadcast control platform projects in
Sichuan, Shenzhen, Beijing, Hubei, Hunan, Shandong which were all
successfully connected with the central-level platform
 In 2012, UTStarcom won the first of the 42 new trial cities in China and
built IPTV broadcasting control platform in the city of Chongqing
1
Sichuan broadcast control platform
CTV
重庆
2
D
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Strategy 2: Parallel Growth Opportunities
Service
•
•
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
Cable
Telco
Interactive video
services
4million
(iDTV)
6.7million
(IPTV)
Broadband service
<5million
>100million
Bi-directional
network
percentage
<25%
100%
Voice services
none
>1 billion
187 million
88 million
none
TV and
Digital TV service
Source: SARFT Report January 2011 and UTStarcom
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Corporate Strategy 3: Equipment and Services
Application
Products
Network
Infrastructure
Equipment Provider
Video
Service Cloud
Revenue
Sharing
Media Operational Support Service
Traditional Business: Equipment Provider
 Video Service Cloud (VSC) Platform enables video operators to rapidly launch IP
video service and provide customers with interactive video experience
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Video Service Cloud Platform
Video Content
Exchange
Cloud-Based Video Services
Services include: video conferencing, online
education, online office, online theater …….
Video Distribution Network
Rollingstream
technology
Video
Communication
technology
Network
Infrastructure
technology
Strategic
partnership on
broadband
resource
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Financial Overview and Outlook
Total Revenue
 $83.5 million in Q4 2011, 9.6% or $7.3 million increase year over year
 $320.6 million in FY2011, 10.0% or $29.0 million increase year over
year
 Without PAS deferred revenue, book-to-bill ratio for the fourth quarter
was 0.70.
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Gross Margin Improvement
 Q4 2011 gross margin was 34.2% vs. Q4 2010 gross margin of 10.6%
 FY2011 gross margin was 35.7% vs. FY2010 gross margin of 24.1%
US$ (mm)
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Continued Progress in Cost Cutting
 Achieved target of operating expenses below $100 million in 2011
US$ (mm)
50.0%
49.3%
35
45.5%
30
40.0%
25
20
4.2
30.2
15
One-time gain on
divestiture
OPEX
25.1
34.7
20.0
27.1%
10
30.0%
17.8
OPEX/sales
24.0%
5
21.3%
20.0%
0
Q4 2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Total OPEX of Q3 2011 included $4.2 million one-time net gain on divestitures
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Operating Income and Net Income
 Q4 2011 operating income of $8.5 million and Q4 2011 net income of $4.1million
US$ (mm)
  Operating Income
  Net Income
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Balance Sheet & Deposits
 Cash balance of $304.0 million in cash, cash equivalents, and short-term
investment
 Zero debt
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2012 Company Priorities
 Accelerating growth of media operational support service business
 Launch VSC platform and associated services in Q1 2012
 Focus on profitability improvement for equipment business
 Increase enterprise value and enhance shareholder communication
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Investor Relations Contacts
UTStarcom, Investor Relations
Jing Ou-Yang
T: + 8610 8520 5153
E: [email protected]
Ogilvy Financial
In China:
Agustin Bautista
Tel: +86-10-8520-6166
Email: [email protected]
In the U.S.:
Jessica Barist Cohen
Tel: +1-646-460-9989
Email: [email protected]
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