Despite the growth of IPTV services worldwide and the consensus that things are going to get even better for that business, UTStarcom is happy with its decision to divest its IPTV business and is ready to move on as a broadband equipment player, company executives said during third quarter earnings.
The equipment maker dumped its IPTV business in August and "our balance sheet is stronger today than it has been in the past as our cash position remains robust... and we effectively shed a significant amount of liabilities via the IPTV divestiture," UTStarcom CFO Robert Pu said in an earnings news release. "[W]e have more than significant working capital to support our broadband business and the funding of our new initiatives."
For the quarter, the company reported revenues of $40.3 million, a drop of 51.6 percent year-over-year from the $83.83 million it reported in 2011.
"[O]ur underlying business is still achieving relatively strong gross margins and given the IPTV divestiture we have created a leaner operating model," said President-CEO William Wong. "Nevertheless, the third quarter and year-to-date financial results do underscore the urgency of the transition that UTStarcom is undergoing to adapt to market conditions."
Part of that transition will be a strategy that focuses on operational support services (OSS) and "higher value-added broadband equipment products and services that are targeted to a specific set of customers," the news release continued.
That new strategy includes the purchase of a 44 percent stake in U.S. firm aioTV, the developer of a cloud-based video aggregation and distribution platform combining conditional access and content management tools.
Another part of the strategy is an increased focus on TV over IP, which the company will launch in "multiple countries during 2013," Wong said.
"We are very focused on the long-term opportunities that are before us and are looking forward to rolling out our new plan that we believe will deliver a more predictable revenue stream, higher margins, and increased profitability," Wong said.
Along those lines, the company's news release predicted that "revenue from the new TV over IP services [will] become the majority revenue contributor for UTStarcom by 2015 with gross margins in that line of business exceeding 50 percent in that same timeframe."
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