What Is UTStarcom?
UTStarcom is a Fortune 1000 company based in Alameda, California. The company is focused on developing Internet Protocol (IP) communications technologies and products, such as IPTV and Voice over IP (VoIP) solutions. The company achieved success early on in China, which led to it expanding into new businesses. However, that foray was not successful and the company refocused in 2008.
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Founding
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UTStarcom was founded as Unitech Telecom by Hongliang Lu, a Chinese national educated in America. The company's initial focus was on the telecommunications markets in China. Unitech Telecom merged with Starcom Networks in 1995. The newly formed company became UTStarcom.
Success in China
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After years of attempting to develop a viable business in China, UTStarcom eventually launched the Personal Access System. The system, also referred to as the Personal Handy Phone System, is a scaled down, inexpensive cellular network. It operates much like a personal cordless telephone that is tethered to a landline, but has the ability to "hand" cellular calls from one base station to another. This scalable, low-cost system had more than 50 million users in China.
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A Public Company
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UTStarcom went public in 2000, trading on the Nasdaq under the ticker UTSI. The company vastly undervalued its IPO, offering its shares at $18 dollars per share. But the stock began its first day trading at over double that, at $41 per share. By the end of the first trading day, UTStarcom's stock had closed at $68.13, valuing the company at more than $650 million dollars.
Expansion
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Flush with cash from its successful IPO, UTStarcom began to expand rapidly into new markets, including Japan, Europe, the United States and Latin America. The company also diversified from its Personal Access System into new businesses, such as IP communications. Most notably, UTStarcom attempted to enter the competitive consumer handset business when it acquired Audiovoxx Corporation's handset business in 2004.
Restructuring and Future
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UTStarcom's foray into the personal handset business did not prove successful and the company was losing money by 2007. By 2008, a new management team was brought in and the company changed direction. UTStarcom refocused around selling higher margin IP and next-generation communications networks. Its personal handset business was sold to AIG Investments and its CMDA technologies business was spun off to OpenGate Capital.
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