Slide 1: Third Quarter 2012 Results & New Strategy Discussion
UTStarcom Holdings Corp. Third Quarter 2012 Results & New Strategy Discussion NASDAQ: UTSI November 2012 Mr. William Wong, CEO Mr. Robert Pu, CFO
Slide 2: Disclosure & Forward Looking Statements
2 Disclosure & Forward Looking Statements This investor presentation contains forward-looking statements, including statements regarding the Company's expectation regarding its operational support services business, the divestiture of its IPTV equipment business and the Company’s performance in 2012
Slide 3: Agenda
Agenda Third Quarter Financial Overview Introduction 3 2 Overview of New Strategy 1
Slide 4: Agenda: Introduction
Agenda Introduction 1
Slide 5: UTStarcom's New Vision
UTStarcom’s New Vision UTStarcom Aims to Become a Next Generation Media Company Higher Margin Broadband Equipment Products and Services Targeting a Specific Set of Customers Higher Growth, More Profitable Business Focused on Deploying Media Operational Support Services Equipment Focused Business tra
Slide 6: Agenda: Third Quarter Financial Overview
Agenda Third Quarter Financial Overview 2
Slide 7: Third Quarter 2012 Financial Highlights
7 Third Quarter 2012 Financial Highlights The Company successfully closed the divestiture of its IPTV business on August 31, 2012 as part of a plan to transition the Company into higher growth, more profitable areas. As of September 30, 2012, the Company did not meet the requirements to report resul
Slide 8: Non-GAAP Total Revenue
8 Non-GAAP Total Revenue Non-GAAP total revenues for the third quarter of 2012 were $37.0 million, a decrease of 19.1% year-over-year from $45.8 million for the corresponding period of 2011. Non-GAAP total revenues for the nine months ended September 30, 2012 were $116.3 million, a decrease of 11.9%
Slide 9: Non-GAAP Gross Profit
9 Non-GAAP Gross Profit Non-GAAP Q3 2012 gross profit was $12.7 million vs. Q3 2011 gross profit of 20.5 million. Non-GAAP gross profit in the first nine months of 2012 was $40.7 million vs. first nine months 2011 gross profit of $56.6 million. US$(mm) US$(mm)
Slide 10: Non-GAAP Gross Margin
10 Non-GAAP Gross Margin Non-GAAP Q3 2012 gross margin was 34.4% vs. Q3 2011 gross margin of 44.7%. Non-GAAP gross margin in the first nine months of 2012 was 35.0% vs. first nine months 2011 gross margin of 42.9%.
Slide 11: Non-GAAP Operating Expense
11 US$ (mm) Non-GAAP Operating Expense The one–time gain on divestiture of $4.2 million in the third quarter of 2011 was due to contingent gain realized upon entering into a three-party assignment agreement. US$ (mm)
Slide 12: Non-GAAP Operating Result & Net Income/Loss
Non-GAAP Operating Result & Net Income/Loss US$ (mm) 12 Non-GAAP Operating Income/Loss Comparison Non-GAAP Net Income/Loss Comparison US$ (mm)
Slide 13: Q3 2012 Cash Position
13 Cash balance of $213.1 million in cash, cash equivalents, and short-term investment Zero debt Q3 2012 Cash Position Cash Distribution by Currency Cash Distribution by Region
Slide 14: Non-GAAP Cash Flow Analysis
14 Quarterly non-GAAP net cash used by operating activities for the third quarter of 2012 was $1.8 million. Impact on cash balance due to IPTV divestiture $30M cash balance deconsolidation $20M convertible bond Share repurchase program update: The Company repurchased $3.5 million in ordinary shares
Slide 15: Agenda: Overview of New Strategy
Agenda Overview of New Strategy
Slide 16: Guiding Priorities and Objectives
Guiding Priorities and Objectives Focus on faster-growing, higher margin opportunities TV over IP Services for broadband and cable operators Exit from lower-margin equipment business to enhance overall profitability Divested the IPTV equipment business as the first step Grow existing higher margin b
Slide 17: Market Trends and Opportunities
Market Trends and Opportunities Monetization (Branding, Advertising, Digital Rights Management, Syndication, Subscription and Internet Based Content, etc.) Multiple Platforms (Content Management, Content Distribution, Content Publishing, etc.) Multiple Screens (Desktop, Mobile, Tablet, TV, etc.) PM
Slide 18: The Components of Our Strategy
The Components of Our Strategy Build Out Media Operational Support Services Offering by Creating and Building a TV over IP Services Platform 1 Build Out New Services through a Combination of Internal Development and Strategic Acquisitions 2 Design an Optimal Operating Structure to Maximize the Poten
Slide 19: Build Out TV over IP Services Platform
Rich Content with Personalized Entertainment Experience Blended Paid-for and Free Programs Anytime/Anywhere/Any Device Value-added Services (e.g. social TV, games, education, TVshopping) High Demand Content in Regional Markets Across Asia for Main Stream Local Content Premium Licensed Content Intern
Slide 20: Building New Services & Maximizing Potential
Building New Services & Maximizing Potential Leverage strong technical expertise in UTStarcom launched video service cloud platform and the understanding and knowledge of broadband/IPTV equipment customers’ needs to develop new services Leverage existing relationships to establish partnerships with
Slide 21: UTStarcom Competitive Advantages
UTStarcom Competitive Advantages Strong brand recognition as a leading telecom equipment provider Widely deployed network system equipment Experienced in set top box technologies and product development Expertise with mobile terminals through the PHS business and mobile terminal business Expertise a
Slide 22: UTStarcom Strategy Timeline
Timeline 2013 2015 Divested IPTV equipment business Reorganized company structure Restructured broadband business Redesigned management team and added new independent director to Board 2014 2012 Fully transition to new business model Invest in new product development Make strategic acquisitions and
Slide 23: Appendix
Agenda APPENDIX
Slide 24: Appendix – GAAP Financial Statement
24 Appendix – GAAP Financial Statement September 30, December 31, 2012 2011 ASSETS Current assets: Cash, cash equivalents and short-term investments 213,091 $ 303,998 $ Accounts and notes receivable, net 12,348 20,216 Inventories and deferred costs 129,005 137,484 Prepaids and other current assets 5
Slide 25: Appendix – GAAP Financial Statement
25 Appendix – GAAP Financial Statement 2012 2011 2012 2011 Net sales 40,328 $ 83,297 $ 143,454 $ 237,110 $ Cost of net sales 26,010 51,352 88,998 151,326 Gross profit 14,318 31,945 54,456 85,784 35.5 % 38.4 % 38.0 % 36.2 % Operating expenses: Selling, general and administrative 13,988 14,780 39,738
Slide 26: Investor Relations Contacts
26 Investor Relations Contacts UTStarcom Robert Pu Tel: + 86-10-8520-5153 Email: robert.pu@utstar.com Jing Ou-Yang Tel: + 8610 8520 5153 Email: jouyang@utstar.com FTI Consulting May Shen (China) Tel: +86-10-8591-1951 Email: may.shen@fticonsulting.com Daniel DelRe (Hong Kong) Tel: +852-3768-4547 Emai