UTStarcom Holdings, a provider of interactive, IP-based
network solutions in iDTV, IPTV, Internet TV and Broadband for cable and
telecom operators, reported total revenues were $92.5 million for the second
quarter ended June 30, 2011, a 26.4 percent or $19.3 million increase from the
corresponding period in 2010.
The increase was driven by the $7.4 million of equipment
revenue recognized on the Jersey Telecom contract upon the receipt of final
acceptance certificate in the second quarter and increased sales of PTN
products in Japan, partially offset by the decrease resulting from the
wind-down of our handset business and decrease in sales of other major product
lines compared to the same period in 2010.
Net sales from equipment-based services for the second
quarter of 2011 were $11.1 million, representing an increase of 4.7 percent
relative to the corresponding period in 2010.
The increase was primarily driven by the $3.9 million of
service revenue recognized on the Jersey Telecom Limited contract and increased
sales in Japan partially offset by fewer iPAS maintenance contracts due to the
anticipated phase out of PHS in China in 2011.
Net sales from operational support service for the second
quarter of 2011 were $0.1 million from an IP Signage revenue sharing project.
Gross margin for the second quarter of 2011 was 37.6
percent as compared to 31.3 percent in the second quarter of 2010 and 31.1
percent in the first quarter of 2011. Gross profit was $34.8 million in the
second quarter of 2011 compared to $22.9 million in the corresponding period of
2010.
Net income attributable to UTStarcom’s shareholders for
the second quarter of 2011 was $11.6 million or basic earnings per share of
$0.07, as compared to a loss of $9.0 million, or a loss of $0.07 per share in
the second quarter of 2010.
With a significant boost from the equipment business,
UTStarcom
obtained our first profitable quarter after 24 consecutive quarters of losses.
It is a very important milestone for the new management team to achieve after a
long process of restructuring and reorganization,” said Jack Lu, president and
CEO of UTStarcom.
However, there were significant items which had positive
impact on the company’s results this quarter. UTStarcom understand that it will
require more discipline and more meaningful progress on the top line to achieve
sustainable profitability.
These results demonstrate that UTStarcom’s aggressive
restructuring and the three point strategy are providing the foundation that
UTStarcom needs for the future. UTStarcom is capitalizing on this in its
efforts to achieve the full year outlook.
UTStarcom’s gross profit was $34.8 million, or 37.6
percent of net sales, for the second quarter of 2011, compared to that of $22.9
million, or 31.3 percent of net sales, for the corresponding period in 2010.
Gross profit was $53.8 million, or 35.0 percent of net
sales, for the six months ended June 30 2011, compared to $50.1 million, or
32.5 percent of net sales, year over year.
Gross profit and gross profit as a percentage of net
sales from equipment increased to $31.6 million and 38.9 percent, respectively,
for the second quarter of 2011, from $19.1 million and 30.5 percent for the
corresponding period in 2010.
The increase was primarily due to the higher product
gross margin generated from the equipment revenue of $7.4 million recognized on
the Jersey Telecom Limited contract and increased sales of PTN products with
higher gross margin in the second quarter of 2011.
Gross profit and gross profit as a percentage of net
sales from the equipment-based services increased to $4.3 million and 38.7
percent, respectively, for the second quarter of 2011, from $3.8 million and
35.8 percent for the corresponding period in 2010.
The increase was primarily due to the higher product
gross margin generated from the service revenue of $3.9 million recognized on
the Jersey Telecom Limited contract and increased sales in Japan with higher
gross margin in the second quarter of 2011.
Gross loss from operational support service was $1.1
million as a result of amortization of costs of a revenue sharing project for
the second quarter in 2011.
Operating expenses were $25.1 million in the second
quarter of 2011, a decrease of 10.3 percent compared to $28.0 million in the
corresponding period in 2010. Operating expenses were $55.3 million for the six
months ended June 30, 2011, a decrease of 25.2 percent compared to $73.9
million year over year.
R&D expenses were $6.7 million in the second quarter
of 2011, representing a decrease of 26.2 percent compared to $9.1 million in
the corresponding period in 2010.
The above resulted in an income from operations of $9.7
million for the second quarter of 2011,
The target to generate 10 percent of total sales in 2011
from the new Operational Support Service business was based on a level of
progress in organic and acquisition activities that may not be achieved in the
year.
While OSS remains a key focus of the company, the due
diligence process and negotiations with acquisition targets and revenue sharing
partners have seen delays which may impact the Company’s ability to achieve
this target for the full year.
By Telecomlead.com Team
[email protected]
