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Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (4087)	1/7/2005 4:35:25 PM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

UTStarcom Slashes Estimates on China Slowdown Published: January 06, 2005 5:12 PM ALAMEDA, Calif. (Dow Jones)--UTStarcom Inc. (UTSI) lowered its fourth-quarter earnings and revenue guidance as continued sluggish demand in the China market is expected to send the bottom line into the red. However, the seller of wireline and wireless telecommunications equipment expects to return to the black in the first quarter, although net income is expected to fall well below last year's totals. For the fourth quarter, UTStarcom now expects a loss of 40 cents to 45 cents a share, lowered from its October break-even outlook. In a press release Thursday, UTStarcom said the bottom-line loss was hurt largely by a revenue shortfall of about $135 million due to the slump in China, which further hurt gross margins. The bottom line also includes a charge of about $10 million to $12 million from the consolidation of its Korean operations and about $5 million in costs from a emphasis on its CDMA handset business. Thomson First Call projects fourth-quarter earnings of 1 cent a share, based on a survey of 16 analysts. A year earlier, the company earned 52 cents a share. In China, UTStarcom's largest revenue producer, changes in senior management disrupted operations at main carriers contributed to the slump in China. UTStarcom also said carriers' moves moves to centralize decisionmaking from regional heads led to delayed contracts in the region. Also, UTStarcom said telecommunications companies China Telecom Corp. (CHA) and China Netcom Group Corp. (CN) didn't implement a year-end boost in promotional spending that UTStarcom traditionally benefited from. Other factors for the continued slump included an overall slowing of China's economy, maturation of the personal access system and a drop in capital spending, UTStarcom said. UTStarcom lowered its fourth-quarter revenue guidance to between $740 million and $745 million, down from its October guidance of $875 million to $885 million. First Call projects revenue of $874 million. A year earlier, the company posted sales of $622.3 million. Sales from China are expected to total about $350 million to $355 million. Gross margin for the quarter is pegged at 21%, with backlog expected to total about $1.2 billion. UTStarcom expects a first-quarter rebound on strong international backlog and strong Audiovox sales. The company expects first-quarter earnings of between 20 cents and 22 cents a share, topping a First Call projection of 12 cents but falling short of the 40 cents posted a year ago. First-quarter revenue, expected to spark higher revenue and bottom-line profitability smartmoney.com