Thursday July 18, 6:31 pm Eastern Time
Reuters Company News
UTStarcom posts record results in second-quarter
By Eric Auchard
(wraps in CFO interview, consensus views, byline, details, analyst comment, share price move)
NEW YORK, July 18 (Reuters) - Chinese-led communications equipment maker UTStarCom Inc. (NasdaqNM:UTSI - News) posted record results on Thursday as sales grew 65 percent to $231 million, driven by the U.S. company's focus on China and other fast-growing Asian markets.
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The supplier of network equipment for China's burgeoning mobile communication market also expects to beat existing analyst sales and profit forecasts for the current third quarter and full-year 2002, its chief financial officer said.
UTStarcom, which is based in Alameda, California and listed on the Nasdaq stock market, was founded and is led by Chinese entrepreneurs. The company has emerged as a well-connected supplier of wired and wireless reception gear in China.
"The message here is...that our strong financial performance is continuing," UTStarcom Chief Financial Officer Michael Sophie told Reuters in an interview.
"Not only is the business strong in China, but the company is rapidly becoming a global telecommunications technology provider," he said.
Shares of the company, which fell 15 cents to $20.67 in regular-session trading ahead of the report, bounced up as much as 4 percent in after-hours trading before settling back to trade at $21, up 33 cents.
The company reported second-quarter operating income -- excluding charges for employee-stock options and research and investment write-offs -- rose to $28.2 million, or 24 cents a share, compared with $15.4 million, or 15 cents per share, in the second quarter of 2001.
Net income, including charges amounting to 2 cents per share, rose to $25.7 million, or 22 cents per share, compared with net of $12.3 million, or 12 cents per share, for the second quarter of 2001.
RIGHT MARKETS, SURGING GROWTH
The latest operating results of 24 cents per share were two cents ahead of the consensus forecast among financial analysts surveyed by Thomson First Call, according to Sophie.
Second-quarter net sales of $231.5 million compared with $140.0 million reported in the year-ago second quarter.
Sales were 12 percent higher than the top analyst forecast of $205.9 million, thanks to solid growth in sales to Chinese network operators of its PAS wireless system and a new $20 million deal in Vietnam.
Looking ahead, Sophie said UTStarcom now expected third-quarter operating earnings of around 27 cents to 28 cents per share, slightly above the current 27 cent consensus among analysts surveyed by Thomson First Call.
He said the company was also boosting its full-year profit outlook to a range between 99 cents and $1.01, up from its prior outlook of 96-99 cents. Sales will run to the higher end of a range between $900 million to $925 million, significantly above the current $876.1 million financial analyst consensus view.
While the company is trading in the middle of its 52-week range of $13 to $35, the mid-sized telecom equipment maker has outshined all larger rivals, many of whose stocks have crumpled amid a collapse in global network spending.
By focusing on emerging markets in China, India and Vietnam, and more established markets such as Taiwan and Japan, UTStarcom has delivered consistent high double-digit growth rates of the sort that U.S. rivals last saw in the dot-com era.
EXPANDING BEYOND CHINA
Marking progress in its ambition to move beyond China to become a global equipment supplier, UTStarcom said that 20 percent of sales came from outside mainland China in the second quarter, up from 10 percent of sales just two years ago.
In India it boasts a leading share in the market for the latest gear used to build local, fixed line phone systems. In Taiwan, UTStarcom sells equipment used to offer 64 kilobit-per-second wireless data access on the island nation.
"Our international business outside of China is growing at better than a 100 percent rate off a pretty big base," Sophie said. "We feel very comfortable that it will reach over $120 million outside of mainland China," he said of 2002 sales.
While UTStarcom trades at a discount because of its heavy emphasis on volatile Asian markets, it coincidentally has inherited the former headquarters of Ascend Communications, a high-flying stock popular with U.S. investors in the 1990s.
"They are certainly differentiating themselves as they are about the only mid-sized wireless equipment company out there that is doing well, and consistently doing well," said analyst Dale Phau of brokerage CIBC World Markets in San Francisco.
The company generated $59 million in cash during the second-quarter and counts more than $400 million on its balance sheet in cash and other short-term holdings. |
