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Corporate Presentation NASDAQ: UTSI March 2012. Disclosure & Forward Looking Statements 2 This investor presentation contains forward-looking statements,

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Presentation on theme: "Corporate Presentation NASDAQ: UTSI March 2012. Disclosure & Forward Looking Statements 2 This investor presentation contains forward-looking statements,"— Presentation transcript:

1 Corporate Presentation NASDAQ: UTSI March 2012

2 Disclosure & Forward Looking Statements 2 This investor presentation contains forward-looking statements, including statements regarding the Company's strategy to reduce operating expenses, ability to achieve profitability, investment in selective products and certain geographic regions, diversification of business and customer base, transition to a new business model and anticipated or assumed future financial results. Forward- looking statements are based on current expectations, estimates, forecasts and projections about the Company, the Companys future performance and the industries in which the Company operates as well as on the Company management's assumptions and beliefs. These forward-looking statements are only predictions and are subject to risks and uncertainties related to, among other things, the ability of the Company to realize anticipated results of operational improvements, increase bookings, successfully transition to a new management team and headquarters location and execute on its business plan, as well as risk factors identified in its latest Annual Report on Form 10-K, as amended, Quarterly Reports on Form 6K and 10-Q and Current Reports on Form 8-K, as filed with the Securities and Exchange Commission. Therefore, actual results could differ materially and adversely from the Company's current expectations. We undertake no obligation to update these forward-looking statements to reflect events or circumstances occurring after the date of this investor presentation. The Company is in a period of significant transition and in the conduct of its business is exposed to additional risks as a result. This investor presentation also includes financial guidance and information about the Company previously disclosed during the Company's 2009, 2010 and 2011 earnings conference calls, restructuring announcements on December 18, 2008 and November 9, 2009 and other filings with the Securities and Exchange Commission. Such guidance and information reflects the Companys information and expectations as of those dates and this presentation is not intended to confirm or update that information and expectations.

3 Agenda 3 Corporate Overview 1 Financial Overview and Outlook Market Dynamics & Growth Strategy 23

4 CORPORATE OVERVIEW

5 Company Introduction 5 A leading provider of interactive, IP-based network solutions in iDTV, IPTV, Internet TV and broadband for cable and telecom operators Technology and services expand and help modernize communications networks Provide operators with increased revenue opportunities and subscribers with enhanced interactive communications experiences Share Price:$1.58 (as of March 13, 2012) Shares Outstanding:151 million Legal Counsel:Covington & Burling LLP Auditor: PricewaterhouseCoopers

6 Investment Highlights 6 Achieved profitability in 2011 Strong existing relationships with leading telecom, cable and media players in China and across the rest of Asia Well positioned to benefit from Chinas Three Network Convergence policy and development Diversifying business model into high-margin new service business (Operation Support Business) with recurring revenues Diversifying customer base to broaden profit opportunities Strong cash position and no debt

7 Our Positioning and Growth Strategy 7 Concentrate on China and Asian markets Leverage Three Network Convergence (TNC) policy in China Senior management closer to client decision-makers Successfully improved internal communication & lowered costs Core IP technology applied across different networks Strong competitive edge and opportunity with both telecom and cable operator Strategy 1: Return to China Demand for interactive services creates the opportunity for equipment AND services revenue with higher margin earnings New service business model moves UTStarcom up the value chain and closer to interactive TV operators Existing telecommunication products, RollingStream technology and sales channels serve as the foundation for UTSIs new service business Strategy 2: Telecom and Cable in Parallel Strategy 3: Equipment AND Service A leading provider of interactive, IP-based network solutions in iDTV, IPTV, Internet TV and Broadband to cable and telecom operators

8 RollingStream Technology 8 SOLUTION AND VALUE TO CUSTOMER PRODUCTS OR SERVICE PROVIDEDTARGET CUSTOMERS RollingStream® Technology: provides customers market - leading interactive TV solutions RollingStream enables operators to provide IPTV, iDTV, Internet TV, mobileTV, video information and other industrial applications. Hardware includes: Infrastructure Components: Terminals: 1.Telecom operators 2. Cable operators 3. TV stations and content license holders who, in China, run broadcast control platforms Video Storage and Streaming Servers OSS IP STBDual-mode STB

9 Broadband and NGN Solutions 9 SOLUTION AND VALUE TO CUSTOMER PRODUCTS OR SERVICE PROVIDED TARGET CUSTOMER Broadband Solution: provides high bandwidth network infrastructure for communications networks PTN MSTP G/E-PON 1.Telecom operators 2. Cable operators NGN Solution: Provides a multi- service IP-based soft switch system for voice, data, mobile and multimedia operations 1.Telecom operators 2. Cable operators Call server Media Gateway BBS 4000 ONU NetRing 4K TN725 NetRing2500 TN705

10 10 Leading Market Position in China Focus AreaUTStarcoms Achievements Interactive Television (including IPTV, iDTV & Internet TV) Currently hold a leading IPTV market share in China Contracts won from both cable and telecom operators to expand IPTV system - Zhejiang, Fujian, Anhui and Shenzhen Built 7 IPTV Broadcast Control Platforms in China Target Video Service Cloud Platform launch in Q Smart Grid Approved as a qualified EPON supplier for China State Grid Company The first EPON supplier to Chinas electricity grid companies EPON product supplier to the Ningxia provincial electricity grid company

11 Leading Market Position in APAC Market UTStarcom Confidential Market & Focus Area UTStarcoms Achievements Japan: Focused on Broadband Supply 50% of SoftBank Broadband (SBB)s MSTP transmissions. SBB is currently Japans 3rd largest telecom operator Preferred PTN supplier of next generation IP transmission equipment for SBB Cumulative booking of higher-margin PTN products hit $100 million Other APAC Market: Focused on Broadband Won sizable MSTP and PTN contracts from Chunghwa Telecom RollingStream® infrastructure product sales increased in India

12 Market Dynamics & Growth Strategy

13 Chinas Three Network Convergence: a growth catalyst for UTStarcom 13 Focused on cable / teleco two-way entrance Pilots concluded and expansion drives ahead Policy Launched Pilots Conducted National Implementation Three Network Convergence (TNC) is the Chinese government policy dedicated to integration of telecom, broadband and cable TV networks Three Network Convergence related market will reach RMB 688B over the next three years, including RMB 249B on equipment and network buildout and RMB 439B from interactive media user demand Source: iChina Research Center, , Analysis of Market Size, Industry and Region for Three-Network Convergence and policy directives issued by Chinas State Council.

14 UTStarcom Wins in TNC 14 1 D 2 Sichuan broadcast control platform In 2010, UTStarcom built 6 IPTV broadcast control platform projects in Sichuan, Shenzhen, Beijing, Hubei, Hunan, Shandong which were all successfully connected with the central-level platform In 2012, UTStarcom won the first of the 42 new trial cities in China and built IPTV broadcasting control platform in the city of Chongqing CTV

15 Strategy 2: Parallel Growth Opportunities 15 none 4million (iDTV) <5million >1 billion 6.7million (IPTV) >100million 187 million 88 million none Interactive video services Interactive video services Broadband service TV and Digital TV service TV and Digital TV service Voice services <25%100% Bi-directional network percentage Bi-directional network percentage ServiceCableTelco TNC will increase opportunities with cable and telecom operators because of infrastructure investment Our Broadband, RollingStream video platform and mSwitch NGN solutions help meet the TNC needs of both sectors Source: SARFT Report January 2011 and UTStarcom

16 Corporate Strategy 3: Equipment and Services Traditional Business: Equipment Provider Media Operational Support Service Network Infrastructure Application Products Video Service Cloud (VSC) Platform enables video operators to rapidly launch IP video service and provide customers with interactive video experience Revenue Sharing Video Service Cloud Equipment Provider 16

17 Video Distribution Network Cloud-Based Video Services Video Content Exchange Rollingstream technology Network Infrastructure technology Strategic partnership on broadband resource Video Service Cloud Platform Services include: video conferencing, online education, online office, online theater ……. 17 Video Communication technology

18 Financial Overview and Outlook

19 19 Total Revenue $83.5 million in Q4 2011, 9.6% or $7.3 million increase year over year $320.6 million in FY2011, 10.0% or $29.0 million increase year over year Without PAS deferred revenue, book-to-bill ratio for the fourth quarter was 0.70.

20 20 Gross Margin Improvement Q gross margin was 34.2% vs. Q gross margin of 10.6% FY2011 gross margin was 35.7% vs. FY2010 gross margin of 24.1% US$ (mm)

21 21 Continued Progress in Cost Cutting US$ (mm) Total OPEX of Q included $4.2 million one-time net gain on divestitures Achieved target of operating expenses below $100 million in 2011

22 Operating Income and Net Income US$ (mm) Q operating income of $8.5 million and Q net income of $4.1million Operating Income Net Income 22

23 23 Cash balance of $304.0 million in cash, cash equivalents, and short-term investment Zero debt Balance Sheet & Deposits

24 Company Priorities Accelerating growth of media operational support service business Launch VSC platform and associated services in Q Focus on profitability improvement for equipment business Increase enterprise value and enhance shareholder communication

25 25 Investor Relations Contacts UTStarcom, Investor Relations Jing Ou-Yang T: E: Ogilvy Financial In China: Agustin Bautista Tel: In the U.S.: Jessica Barist Cohen Tel:


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