IP networking products provider UTStarcom Holdings reported fourth quarter results showing non-GAAP revenues down 13 percent year-on-year to USD 41.0 million. Non-GAAP results do not include the amortisation of PHS deferred revenue and the IPTV business, which could not yet be reported as discontinued operations. Total revenues for the quarter fell 48.2 percent to USD 43.3 million.
Non-GAAP net sales from equipment-based services decreased 2.0 percent in Q4 to USD 6.3 million. The decrease was mainly caused by decreased sales of PTN products in Japan and GEPON products in China which was partially offset by increased sales of MSAN products in Japan.
UTStarcom will be focusing its growth efforts in China and across Asia and expects to invest in and launch its TV over IP services in multiple countries this year. The company anticipates revenue from the new TV over IP services to become the majority revenue contributor for UTStarcom by 2015, with gross margins in this line of the business exceeding 50% in that same timeframe.
The non-GAAP gross margin declined slightly to 32.4 percent from 34.3 percent. The non-GAAP net loss widened to USD 6.7 million, or a non-GAAP basic loss per share of USD 0.05, compared to a loss of 2.7 million, or a basic loss per share at 0.02. The total net loss attributable to UTStarcom shareholders was at USD 6.4 million, or a basic loss per share of 0.05, from a loss of 4.1 million, or a loss per income of 0.03 the year before.
At the end of December, cash, cash equivalents and short-term investments amounted to USD 179.9 million.
UTStarcom president and CEO William Wong called 2012 “a year of significant transition” for the company as it began exiting the IPTV equipment business and launched a new strategy designed to transform the company into a higher growth, more profitable business focused on providing next generation media operational support services and higher value-added broadband equipment offerings. The company repurchased stock and effected a tender offer, returning a total of USD 45 million to shareholders since 2011.
UTStarcom sees 2013 as a year of investment and continued transition, with some improvement in overall financial performance. There will be a need to replace unprofitable revenue that was removed with the IPTV divestiture and revenue will be below last year while this process is on-going and the top line is in transition. At the same time, the company will focus on holding margins relatively stable by maintaining a similar product mix to 2012 as well as making additional progress with lowering operating expenses. Looking further ahead, the new strategic plan is expected to in time result in a more predictable, recurring revenue stream based on an array of sources, including subscription fees, platform licensing fees, and fees on value added services as well as higher margins due to the increased profitability of these revenues.
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