To: Bill Harmond who wrote (11118 ) 4/12/2002 3:10:22 PM From: Bill Harmond Respond to UTStarcom (UTSI) 23.99 +0.63: UTSI is a telecom equipment vendor with nearly all of its sales in China. Not surprisingly, the telecom market is very different in China as compared to the U.S. The world's most populous country is still in the early stages of its telecom infrastructure development and the Chinese government has made it a high priority. China's demand for communications services is highlighted by its relatively low teledensity rate, which is a measure of the number of lines per hundred people. According to 1999 statistics from the International Telecommunication Union, China, with a population of 1.3 billion, has a teledensity rate of only 8.6% compared to teledensity rates in Brazil of 14.9%, in the United Kingdom of 57.5%, and in the United States of 68.2%. While growth in the China communications market is driven predominantly by voice services, the increasing demand for data services also presents a growing opportunity. So while telecom equipment stocks have been out of favor for some time, we see no need to paint UTSI with the same brush. Note that UTSI came under pressure last month as a result of comments 'allegedly made' by a Minister of Information Industry Official in China. According to some reports, this official stated that applications to deploy PAS networks in new cities and provinces in China would not be approved. These comments were then refuted by other officials stating UTSI 'will get licenses' and the Official was 'seen as misquoted.' We continue to view the recent weakness as an opportunity rather than a concern, and we continue to be bullish on the stock's long-term prospects. -- Mike Ashbaugh, Briefing.com
