UTStarcom cuts loss in Q4; Future uncertain
UTStarcom – which makes IP-based networking, wireless, broadband and cell phone products – narrowed its losses in the fourth quarter, but the company’s accountant has expressed concern about the company’s financial stability.
In the fourth quarter, the Alameda, Calif.-based company lost $24.6 million, or 20 cents per share, compared with a loss of $42 million, or 35 cents per share, in the fourth quarter of 2006.
Net sales for the quarter were $806 million, compared with the $704 million the company posted in the same time frame in 2006.
In 2007, UTStarcom lost $195.6 million, or $1.62 per share, compared with $117.3 million, or 93 cents per share, in 2006. Net sales increased slightly from $2.46 in 2006 to $2.47 last year.
UTStarcom said that it will use $289.5 million to pay off its convertible notes that are due March 1.
Because of its recurring net losses, the continued use of cash in its operations and the repayment of the convertible notes, UTStarcom said in yesterday’s earnings report that it expects its independent registered public accounting firm to issue a “going concern uncertainty explanatory paragraph” in its audit report on the financial statements for 2007.
The company said that management believed that it had developed a liquidity plan that, if executed successfully, will provide sufficient liquidity to finance the company's working capital and capital expenditure requirements for the next 12 months.
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