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Strategies & Market Trends : The New Economy and its Winners

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To: Bill Harmond who wrote (10754)	3/6/2002 3:32:58 PM
From: Bill Harmond	Read Replies (2) of 57684

Salomon Smith Barney on UTStarcom (UTSI) 23.33 -1.37: --Intraday-- This morning there was an article quoting Wu Jichuan (head of MII) that China Tel will not be approved for new licenses to provide its PAS service. Although China Tel will be allowed to continue to build out its PAS networks in regions it has a license (about 22 provinces), Salomon Smith Barney feels inability to continue to expand its reach of PAS with new licenses lowers longer-term growth profile of PAS industry in China from an equipment perspective. Near-term EPS visibility remains high for UTSI, firm's ests for Y02 remain unchanged. However, firm believes this news underscores firm's biggest concern with UTSI - unpredictability & credibility of news-flow from China; believes stock's multiple is likely to receive a discount to 2-3 year EPS growth rate (35%) given increased uncertainty surrounding viability and predictability of UTSI's long-term earnings profile. Firm lowers price target to $25 from $38.

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