UTStarcom Announces New TV over IP Strategy
UTStarcom, 11/15/12
Chinese network solutions provider UTStarcom (Nasdaq: UTSI) today announced a strategic plan to transform UTStarcom into a next generation media services focused business. The strategy builds on recently announced initiatives, such as the divestiture of the IPTV equipment business, acceleration of the media operational support services business, and appointment of new executive leadership. The new plan is expected to result in significant overall improvement in UTStarcom's business performance and the company anticipates it will lead to accelerated rates of growth and profit margins.
UTStarcom's three primary development strategies, as described by the company, are as follows:
Deploy a TV over IP Services Platform: UTStarcom will build a major business line around TV over IP services, which offer some of the fastest-growing and highest-margin opportunities in the marketplace. Through TV over IP services, UTStarcom will aim to be a leading provider of high-in-demand digital content, such as local content, premium licensed content, and other value-added services over a variety of platforms to the mainstream consumers. UTStarcom will offer a Cloud-based, integrated platform to support the entire workflow of broadband and cable service providers' TV over IP operations, such as encoding and transcoding, program planning, media distribution, content publication, and product management.
Pursue Internal Product Development and Strategic Acquisitions to Build Out New Services: UTStarcom will leverage its strong technical expertise to develop solutions in-house that will support the new TV over IP platform. Importantly, the company will also seek to acquire or take significant stakes in companies that have market-leading technology that UTStarcom can use to augment its services platform and then deploy commercially, quickly and efficiently.
Design an Optimal Operating Structure to Maximize the Potential of Business Units and Foster Innovation, Collaboration and Efficiency: UTStarcom will structure its business in a way that aggregates and maximizes the potential of its existing and to-expand business units by providing them the flexibility to pursue opportunities while also aligning their interests with broader corporate goals and those of shareholders. The company will also aim to maximize efficiency in operations and minimize fixed costs in order to keep the underlying business strong.
The company expects the adoption of this new strategic plan will in time result in a more predictable, recurring revenue stream based on an array of sources, including subscription fees, platform licensing fees, and fees on value-added services as well as higher margins due to the increased profitability of these revenues. UTStarcom will be focusing its growth efforts in China and across Asia and based on current plans, the company expects to invest in and launch its TV over IP services in multiple countries during 2013. The company anticipates revenue from the new TV over IP services to become the majority revenue contributor for UTStarcom by 2015, with gross margins in that line of the business exceeding 50% in that same timeframe.
Keywords: broadcasting Internet strategy television IP UTSI UTStarcom
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