Some things are just inevitable. The motion of the planets, the return of the swallows to San Juan Capistrano, UTStarcom
The quarter that was was no treat. Revenue fell 34% to just a bit under $600 million, and while management boasted that that number beat its guidance from back in February, let us not forget that management had slashed that estimate pretty considerably. What's more, more than $20 million in revenue this quarter came from order cancellation fees -- not exactly the kind of revenue you want to brag about.
Results were all over the place on a segment basis, but the general trend was still down. Most of the damage came from the broadband infrastructure segment, where revenue fell sharply in comparison with the year-ago quarter, when a Softbank corporation affiliate made a big purchase of equipment and services. Results elsewhere were more sedate -- wireless infrastructure was down 8%, handsets were down 23%, and PCD (a very low-margin business) was up 2%.
I'm also pleased to say the company's CEO will step down at year-end, to be replaced by the head of the company's China operations. I suppose my only question is why the company is waiting until the end of the year. Management competence (or lack thereof) has been one of my foremost complaints with this company, so the sooner a change is made, the better I think it will be.
By no means is this a Cisco
I've disliked UTStarcom for a very long time, and I'm very wary of investing in companies whose management I don't like or trust. But even I have to admit that I'm curious as to whether UTStarcom has approached that point where the odds suggest things won't get much worse. By no means am I recommending that anybody purchase this stock, but I have to admit that I've had more than one or two thoughts of this stock being a high-risk turnaround idea.
For more Foolish thoughts on the telecom sector:
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).