The gang that couldn't shoot straight has struck again, shooting investors in their wallets. Network and handset provider UTStarcom (NASDAQ:UTSI) delivered a surprising first quarter and then topped it off by announcing a restructuring and chilling guidance for the next quarter.

For the first quarter, reported results seem pretty good. Revenue climbed 45% to more than $900 million, and the company reported earnings of $0.29 per share -- both of which were well ahead of the Wall Street estimates. What's more, management reported that 75% of revenue came from outside of China -- an important factoid for a company that desperately needed to diversify its revenue base.

And now for the bad news, and boy is this a doozy.

First of all, management announced that the Chinese business is falling off faster than anticipated. Consequently, it is revising guidance and now looks for revenue from the PAS (personal access system) business to decline by 40% to 50% instead of the previously expected 30%. Given that we're talking about $2 billion in revenue back in 2004, that's a big chunk of change.

With business looking infirm, management cut its guidance for the next quarter to a revenue outlook of $740 million (most of that from handsets), dropped its gross margin assumption and announced a steep loss expectation for the quarter.

In addition, management said that it is initiating a restructuring effort to strip costs out of the business. Along with expanding outsourcing, the company will be sacking about 17% of its workforce. When it's all said and done, management claims it will see $160 million in expense reductions per year and a $200 million lower working capital requirement.

Frankly, I'm skeptical. A target of $160 million seems very generous, since that would represent more than a 20% cut in expenses based on first-quarter run rates. What's more, successful restructurings can be tricky, and I'm not sure this management team is totally up for the job. Additionally, investors might rightly ask how management allowed the company to get into such a state where sweeping changes are now needed.

For those who've read my earlier pieces on UTStarcom, this is really nothing new. While I got my fair share of flame mail back in January when I suggested that questionable accounting controls and management made this a good stock for most investors to avoid, I'll bet most people who got out in January are glad they did.

In any case, only time will tell what the future holds for UTStarcom. I won't deny that there is still considerable growth potential in the business, but I personally have zero confidence in the current management team's ability to realize that growth for shareholders. I'm sure there will still be bulls on the company even after this latest setback, but I'd suggest most investors step away from this stock and just sit back to watch the show.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).